Merchant Enterprise in Britain: From the Industrial Revolution to World War I

Studies of the British Industrial Revolution and of the Victorian period of economic and social development have until very recently concentrated on British industries and industrial regions, while commerce and finance, and particularly that of London, have been substantially neglected. This has distorted our view of the process of change because financial services and much trade continued to be centred on the metropolis, and the south-east region never lost its position at the top of the national league of wealth. This is a pioneer survey of the mercantile sector of the economy from the end of the eighteenth century to World War I. It complements Dr Chapman's The Rise of Merchant Banking (1984), concentrating on the various ways in which British merchants responded to the unprecedented opportunities of the Industrial Revolution and the growth of the British Empire. The main conclusion is that industrial entrepreneurs contributed only briefly to merchant ventures, and that with limited success. Rather did the established merchant community evolve its own new forms of enterprise to meet the changing opportunities: the ' new frontier' merchant networks of the Atlantic economy, the international houses in continental trade, the agency houses in the Far East, and the home trade houses dominating the domestic market. These resilient organisations enabled the British merchant enterprise to survive longer and in greater strength than in other western economies.

MERCHANT ENTERPRISE IN BRITAIN

MERCHANT ENTERPRISE IN BRITAIN From the Industrial Revolution to World War I

STANLEY CHAPMAN Pasold Reader in Business History, University of Nottingham

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The Edinburgh Building, Cambridge CB2 2RU, UK 40 West 20th Street, New York NY 10011-4211, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia Ruiz de Alarcon 13,28014 Madrid, Spain Dock House, The Waterfront, Cape Town 8001, South Africa http://www.cambridge.org © Cambridge University Press 1992 This book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 1992 First paperback edition 2002 A catalogue recordfor this book is available from the British Library Library of Congress Cataloguing in Publication data Chapman, Stanley David., 1935Merchant enterprise in Britain: from the Industrial Revolution to World War I / Stanley Chapman. p. oo cm. Includes index. ISBN 0 521351782 (hardcover) 1. Great Britain - Commerce - History - 18th century. 2. Great Britain - Commerce - History - 19th century. 3. Merchants - Great Britain - History. I. Title. HF3505.C46 1992 380.1'094 l-dc20 91-15818 CIP ISBN 0 521351782 hardback ISBN 0 521 89362 3 paperback

Contents

List of figures List of tables Preface Abbreviations used in the footnotes

page viii x xiii xvi

Introduction: approaches and concepts PART I

i

THE SETTING

1

The eighteenth-century structure of merchant enterprise 2 The consequences of the Industrial Revolution and the French Wars PART II

81 107 129 167

RESPONSE TO INSTANT COMMUNICATION

7 Problems of restructuring mercantile enterprise 8 British-based investment groups before 1914 9 Imperialism and British trade PART IV

51

NEW STREAMS OF ENTERPRISE

3 Merchants in the Atlantic trade 4 The agency houses: trade to India and the Far East 5 The international houses: the foreign contribution to British mercantile enterprise 6 The home trade houses PART III

21

193 231 262

CONCLUSIONS

10 Performance of British mercantile enterprise

287

Manuscript sources Index offirmsand people Index of places Index of subjects

319 323 331 336 vii

Figures

2. i

3.1

The structure of the Philips family businesses in the page 64 early nineteenth century Sources: Philips MSS, Warwick, G.R.O. CR 456/28, 31, 32. A. P. Wadsworth and J . de L. Mann, The Cotton Trade and Industrial Lancashire (Manchester 1931) pp. 288-301.

Universal British Directory, m (1797) pp. 834-5. Early members of the Benson and Rathbone families and their marriage connections

94

Sources: S. B. Foster, The Pedigrees of Birkbeck of MailerStang, Braithwaite of Kendal, Benson of Stang End (1890);

3.2

information from family records held by Mr J. S. Benson. The partnerships and connections of James Finlay & Co. c. 1745-1860

96

Sources: [Colm Brogan] James Finlay & Co. Ltd. (Glasgow

3.3

1951) pp. 11-12, 15. Bank of England Liverpool letters, 24 Nov. and 31 Dec. 1827, Manchester letters 4 Apr. 1829 (Bartons). Partnerships of Fraser, Trenholm & Co., Charleston, USA, 1815-67 Sources: Harvard Univ. Baker Lib., Dun & Bradstreet credit registers, Charleston, vols. 1-3. Merseyside County Museums, Fraser Trenholm MSS. E. M. Lander, The

97

Textile Industry in Antebellum South Carolina (Baton Rouge

5.1 5.2

1969) p. 107. Alien merchants in Manchester, 1790-1870 Source: John Scholes, ' Foreign Merchants in Manchester, 1784-1870', MS, Manchester P.L. T h e Schwabe and Boustead connection Sources: Eric Jennings, 'Bousted History' (unpublished typescript, 1978). Bank of England Liverpool letter books, x (1849) p. 202 (capital), v (1844) p. 378 (Dugdale connection). Manchester PL., John Graham list of printworks (Rhodes factory, near Manchester). vni

139 148

List of Figures 5.3

6.1 8.1 8.2

T h e Ralli and Scaramanga partnerships Sources: Nottingham Univ. Archives, Brandt Circulars, 31 Dec. 1856, 30 Dec. 1865, 1 July 1866, 1 Mar. 1833. Baring Bros. MSS HC 16/2, Report on Business Houses 1850-74. P. Herlihy, Odessa-A History, iyg^-igi^ (Harvard 1986) pp. 93-4, 213. The evolution of distributive systems in the textile industries, sixteenth to twentieth centuries Structure of the Matheson Investment Group c. 1914 Source: see Appendix, Ch. 8. Structure of Wogau & Co., Moscow and London, in 1914

ix 156

169 238

244

Source: Materialy po Istorii SSSR vi (Documents on monopoly

9.1

Capitalism) (Moscow 1959) pp. 697-706. T h e Anglo-German financial connection in South Africa Source: Hans Sauer, Ex Africa (1937) esp. pp. 143-4, J79?

277

214-15.

10.1

Relationships in the structure of the agency house

302

Tables

o. i

0.2

0.3 0.4 0.5 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 3.1

Index of English regional income per head based on income tax (1812 to 1879-80A) then on inhabited page 2 house duty (1879-80B to 1911-12) Occupations of British millionaires and halfmillionaires as a percentage of all non-landed wills in the groups 2 Relative share of six leading European countries' exports in the European total, 1830-1910 (per cent) 5 Geographical distribution of UK exports and imports 1785-1845 (per cent) 6 Geographical destination of UK exports and imports 1860-1910 (per cent) 8 Estimates of mercantile incomes in England in the eighteenth century 22 Analysis of Mortimer's Universal Director (1763) 23 London's share of English trade in the eighteenth century (per cent) 40 Shipping owned in some leading English ports (000s tons) 41 Debts owing to British merchants trading to North America estimated in 1766 42 Dissent in Bristol in 1717 44 The increase of trade and merchant bankruptcy in England (1700, 1759) and Great Britain (1800) 47 Occupations of patentees in England and Wales 1660-1799 (percent) 58 Occupations of owners of the largest Lancashire cotton mills c. 1795 (valuation of £5,000 + ) 60 Cotton stocks in the ports on 1 Jan. 1812 (bags) 83

List of tables 3.2

Cotton imports to leading UK ports in 1833 (bags)

3.3

Number of vessels and amount of tonnage of the principal British ports in 1816 and 1850 Major British merchants in the North of England in the first half of the nineteenth century (capitals of £100,000 + ) Some leading German and American merchants in the North of England in the first half of the nineteenth century Concentration of mercantile leadership: cotton importing The mid nineteenth-century structure of mercantile enterprise The direction of Indian companies in 1911 Sterling and rupee companies in 1914-15 (£m.) Shareholdings in Bird & Co., Calcutta, in 1917 Number of German merchant houses in manufacturing towns of Britain, 1820-50 Place of origin of visitors to the Leipzig Fairs, 1748-1840 Leading Greek merchant houses trading in Britain 1848-50 (top 14) Location of home offices of British mercantile houses established in some foreign countries, 1848—9 Crude estimates of the value of British and foreign capital financing British overseas trade, 1836 London connections of Nottingham merchant hosiers, 1770-5 The City of London textile market in 1817 Capital of leading textile warehousemen c. 1880 Average size of investment in British cotton mills (machinery only) c. 1880 Marketing organisation of Rylands and I. & R. Morley compared, 1897-1900 Capital of some leading London retailers, 1895-6 Capital of some major US and UK cotton merchants in the early twentieth century Quantity of wheat and wheaten flour imported into the UK 1872 and 1903 (qrs.)

xi 83

3.4

3.5

3.6 3.7 4.1 4.2 4.3 5.1 5.2 5.3 5.4 5.5 6.1 6.2 6.3 6.4 6.5 6.6 7.1 7.2

84

90

91 93 99 122 123 126 138 142 158 162 164 172 178 183 184 184 186 197 203

xii 7.3 7.4 7.5

List of tables Leading importers of grain into Britain from St Petersburg, 1878-80 Some major grain merchants of the world in the early twentieth century Some major merchants in new commodities c. 1910-14

8.1 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 10.1 10.2

Agencies of Andrew Yule & Co. in India, 1899 The British share of Chinese trade 1870-1891 Geographical distribution of Asia's trade (per cent) Cotton mill agencies classified by ethnic groups. Bombay 1895—1925 Capital of the leading British agency house group, Jardine Matheson and Jardine Skinner Growth of British agency houses in India 1916-39 Growth of British agency houses in Malaysia, 1913-1940 Professional qualifications of cotton mill directors in Bombay in 1925 The share of Indian and British ownership in factories in India, 1911 Britain and continental shareholding in the Rand mining companies, April 1900 Capital growth of some leading international merchants c. 1860-c. 1910 Share of various organisations in financing the Indian cotton industry in 1930

204 205 210

236 264 264 268 270 270 271 272 273 278 291 307

Preface

During the 1980s the opening and listing of the archives of the Bank of England and a variety of other City of London banks and trading groups made it possible, for the first time, to contemplate filling the major gap in our knowledge of modern British economic history, that of the financial and trading sector. Good materials had been available in Glasgow and Liverpool for some years and recently greatly strengthened with the build-up of Glasgow University's collection of business archives, but London was always the dominant centre of finance and trade. Drawing on some of this rich store I was able to write The Rise of Merchant Banking (Allen & Unwin 1984). The present volume was conceived as a complement to this earlier work. It soon became clear that British merchant enterprise by no means covered all merchants active in Britain. Many of the foremost trading houses from the eighteenth century to World War I were of foreign origin, with cultures and loyalties that were not particularly oriented to English traditions and outlook. The study quickly became one of continental, Ottoman, American and Empire enterprise competing with the 'home grown' firms. Moreover the British group displayed the additional diversity generated by the prominent roles of the Scots, Ulstermen and English Nonconformists in trade, as well as the different approaches of those who came out of northern and midlands industry. Long residence abroad, particularly in British India and South Africa, created the yet different traditions of the nabobs and randlords. The study has therefore become one of diverse origins, cultures, strategies and effectiveness, as British trade not only came to dominate the international economy but attracted a large slice of the world's entrepreneurial talent. The study has resisted the attempts made by some historians and theorists to identify a particular dominant Xlll

xiv

Preface

characteristic of the mercantile group, preferring to profile the rich diversity of enterprise and show something of its consequences for the unprecedented growth of trade in the period. Taken as a whole, the century and a half covered by this volume saw as far-reaching changes in the trading as in the industrial sector of the British economy. However, in trade the major watersheds were the French Wars (i793-1815) and the foreshortening of communications culminating in the telegraph, rather than the Industrial Revolution, as industrialists enjoyed little success as merchants. Broadly speaking, the war period saw the concentration of financial control through what later became known as the merchant banks, but it was not until the 1870s and 1880s that the mass of small family merchant enterprises were concentrated into trading groups, or were overwhelmed by competition. The study therefore offers a new perspective on British economic change to that which we have become accustomed, deferring 'revolutionary' change until the later Victorian age and the relative decline of merchant enterprise until after World War I. This harmonises with the recent research on the Industrial Revolution which calculates economic growth was a more gradual and long-term change than the phrase implies. This book may said to have been written over a period of a dozen years or more as I discovered the numerous scattered sources relating to British merchant enterprise last century. A lot of my earlier research has been published in a variety of academic journals, and the articles form the basis of several chapters. The beginning of my interest can be seen in 'British Marketing Enterprise: the Changing Roles of Merchants, Manufacturers and Financiers 1700-1860', Business History Review LIII (1979) (incorporated in Chapter 2) and in ' T h e International Houses', Journal of European Economic History vi

(1977) (Chapter 5). Its development can be traced in 'British-based Investment Groups before 1914' and 'Investment Groups in India and South Africa', Economic History Review xxxvm (1985) and XL (1987) (Chapter 8), and further in 'British Agency Houses in the Far East in the Nineteenth Century', Textile History xix (1988) (Chapter 4) and 'The Decline and Rise of Textile Merchanting 1880-1990', Business History xxxn (1991) (Chapter 6). Part of Chapter 3 draws on some of the public evidence assembled for my aborted history of merchant bankers Kleinwort Benson. I am grateful to editors, referees and other critics for helping me to sort out my ideas, and to

Preface

xv

the former for permission to reproduce the substance of the argument in this wider thesis. Chapter 9 owes much to visits to Japan (1987) and South Africa (1985—6), where colleagues not only entertained generously, but were also of inestimable value in comprehending British experience on the other side of the world. More generally, I have drawn freely on the research of colleagues more familiar with the archives relating to the US, Russia, Latin America and Australia; in such a large subject area it is impossible to list them all here, but I hope that the footnotes will indicate my large fund of debts. Until recently, British business records have not greatly interested the great number of record offices and libraries, and only a handful of major corporations employ an archivist. The researcher who ventures into this area is therefore particularly conscious of the debt he owes to the patient work of the archivists who have saved so much material from salvage and then carefully preserved and catalogued it. My own research has benefited particularly from the large collections at Guildhall Library in the City of London, Liverpool, Cambridge and Glasgow University Libraries, and the Baker Library at Harvard, and from the private collections of Baring Bros. and the Standard Chartered Bank, but, as my footnotes show, I found material in a score of other repositories in Britain and abroad. My final word of acknowledgement and thanks is therefore to those who have built and maintain such collections; without their work studies like mine could scarcely be conceived, let alone sustained. S. D. CHAPMAN

Abbreviations used in the footnotes

AN B of E Dun

Archives nationales, Paris Bank of England archives, London EC2 Dun & Bradstreet credit registers, Baker Library, Harvard University, USA IOL India Office Library, London SEi JS Jardine Skinner MSS, Cambridge University Library NIRO Northern Ireland Record Office, Belfast SBA Standard Bank Archives, Johannesburg

XVI

Introduction: approaches and concepts

During the course of the last few years the period of British history conventionally known as the Industrial Revolution has lost some of its earlier significance as a watershed period. No doubt there is an element of conditioning by later twentieth-century experience in this attitude, for as British economic growth has looked less impressive compared with some of its competitors, so its interpreters have sought for the less spectacular and more evolutionary elements in its development, including the experience of earlier centuries. The 'revolutionary' feature of British economic and social history was taken to be the dramatic growth of the ' great staple' industries of last century — textiles, iron and coal — and their social consequences, and historians showed little interest in what had happened elsewhere in the economy, unless it was related to these major themes. The recent revisions, in suggesting more gradual growth in the old staples, has also served to rekindle interest in some of the continuities of economic and social life that were more taken for granted by contemporaries. Not the least is the traditional British interest in trade and finance. It must be admitted that econometric measures of the changing structure of the British economy in the Industrial Revolution period, though exhibiting impressive statistical skill, can be no more than 'controlled conjectures'. Moreover, the bulk of the data processed is still drawn from the traditional industries, with little serious attempt to measure change in the service sectors of the economy independently.1 Certainly the attempts to make independent measures of the service sector, and particularly of commerce and finance, though still in the pioneer stages, have produced more solid results. The most striking is that garnered by Clive Lee from Inland 1

N. F. R. Crafts, British Economic Growth during the Industrial Revolution (Oxford 1985). J .

Hoppit, 'Counting the Industrial Revolution', Econ. Hist. Rev. XLIII (1990).

2

Introduction

Table o.i. Index of English regional income per head based on income tax (1812 to i8yg-8oA) then on inhabited house duty (i8yg-8oB to igu-12)

North West South East West Midlands

1812

1859/60

1879-80A

1879-80B

1911/12

100 382 102

100 122 89

100 147 87

100 240 80

100 331 94

Source: extracted from C. H . Lee, The British Economy since 1700. A Macroeconomic Perspective (Cambridge 1986) Table 7.3.

Table 0.2. Occupations of British millionaires and half-millionaires as a percentage of all non-landed wills in the groups 1820-39

1840-59

25 25

40

21

1860-79

1880-99

1900-19

60

55

38 38

54

33 58

33 57

36 44

48

Millionaires

in manufacturing in commerce and finance

17

Half-millionaires

in manufacturing in commerce and finance

63

37

Source: extracted from W. D. Rubenstein, Men of Property. The Very Wealthy in Britain since the Industrial Revolution (1981) Tables 3.6, 3.7.

Revenue returns (Table 0.1). The North West region, which comprises Lancashire and the adjacent counties, has been widely regarded as the home of the factory system and hence of British industrialisation, but on this measure it never succeeded in catching up with the South East, essentially London and the Home Counties and the traditional focus of trade and finance, though of course it always supported some industries. The West Midlands, widely thought of as the other centre of British industrial enterprise, evidently fared even worse. W. D. Rubenstein's analysis of British wealth (Table 0.2) shows that more fortunes were won in commerce and finance than in manufacturing industry as the century advanced. Nearly all the millionaires and half-millionaires in trade and finance worked in the London area. Without entering into further detail at this stage, it is already clear that myopic concentration on this history of British industry in the

Introduction

3

provinces has produced a distorted economic history. The British economy had (and still has) twin pillars for its support, the wealth accumulated in trade, finance and urban estate in the metropolitan area and Home Counties easily balanced by that generated in the Midlands and North. Though the history of the mercantile side is still relatively unexplored territory, at any rate in the nineteenth century, reconnaissance and surveys have produced a number of very suggestive ideas. Some of the more important of these are briefly reviewed in this Introduction. THE MERCHANT S FUNCTIONS

In common parlance a merchant can be almost anyone who buys and sells goods, but such indiscriminate usage is much too wide for manageable research for it must include pedlars, shopkeepers, wholesalers, market stall holders and a host of other traders. Commercial usage was originally much more specific but, because commercial functions changed substantially over the period covered by this book, it is not possible to offer precise definitions to cover the complete time span. Changing functions will be examined as they arise; at this stage it will be sufficient to establish a convention to clear the way for later analysis. In this book merchants are taken to be entrepreneurs engaged in foreign (overseas) commerce as wholesale traders. It is appreciated that Britain had a large and growing domestic seaborne trade in the eighteenth and nineteenth centuries (such as the shipping of coal from Tyneside to London, of copper from Cornwall and Anglesey to the main ports and of grain from Ireland) but this must be left to another volume.2 Such demarcation of the ground must appear at first sight to conflict with the inclusion of the so-called 'home trade houses' (Chapter 6), but it will be seen that these merchant firms had important overseas business from their earliest years and are an outstanding feature of mercantile development in the period. Definition of the sphere of merchant activity does not of course prescribe what they did. Apprenticeship saw trainee merchants keeping accounts for their principals, attending to customers, and busy at the quayside keeping tally of incoming and outgoing cargoes. Later they might serve as a supercargo on ships sailing abroad or 2

For a summary see J. H. Clapham, An Economic History of Modern Britain. The Early Railway Age (1926) pp. 233-62.

4

Introduction

represent their firms in foreign markets. But a successful merchant gave little time to such matters for much of his buying and selling was done through trusted correspondents abroad, while specialist brokers stood ready to serve him in his home port. The one thing he could not delegate was the giving of credit and maintenance of his financial liquidity. The merchant's capital was very largely tied up in stock and credits to customers, and his greatest problem was maintaining cash flow. The pivotal position of the merchant, that is to say, was ultimately based on close financial control.3 This continued to be true as the general merchant of the eighteenth century gave way to the commission merchant of the nineteenth century, and as manufacturers became merchants and merchants extended to manufacturing.4 This key point must justify the considerable space devoted to finance and credit in any study of mercantile enterprise. Some pioneer studies of British trade have devoted a lot of space to examining the differences between the functions of merchants, factors (or commission merchants) and brokers.5 The functions appear quite distinct and logical: merchants traded on their own account while factors were agents who handled commodities for overseas suppliers and domestic or overseas customers but did not as a rule handle the goods. In practice the functions of all three regularly overlapped and it was often a matter of convention whether a firm would call itself one or the other. The present book concentrates on the actual activities of firms rather than the conventional descriptions they often used to describe themselves. BRITISH DOMINATION OF WORLD TRADE

Throughout the nineteenth century Britain was much the world's largest trading nation, a remarkable achievement considering the huge (tenfold) increase in trade in the period. The available data show that, although Germany, Russia and Belgium improved their relative positions in Europe (the principal growth area), Britain was still top on the eve of World War I (Table 0.3). American industrial production overtook that of Britain in the 1890s but her share of 3

5

J. M. Price, 'What did Merchants do? Reflections on British Overseas Trade 1660-1790', 4 Jnl Econ. Hist, XLIX (1989). See below, Ch. 2. R. B. Westerfield, Middlemen in English Business 1660-1720 (Yale 1915) p. 349ff. N. S. Buck, The Development of the Organisation of Anglo-American Trade 1800-1850 (Yale 1925) C h . 2.

Introduction

5

Table 0.3. Relative share of six leading European countries' exports in the European total, 1830-igw [per cent)

United Kingdom France Germany Russia Belgium Austria-Hungary

1830

i860

1890

1910

27*5 15-9 — 7-9 2-9 4-7

29-8 19-2 18*4 5*6 4-0 5-8

26*6 15*3 17*4 8-3 6-i 6*5

23-7 13*4 20*4 8*9 7-3 5*6

Source: extracted from Paul Bairoch, Commerce exterieure et developpement economique

de VEurope au XIXe siecle (Paris 1976) p. 77. The data for 1830 is approximate, that for 1860-90 based on three year averages.

world trade remained much smaller down to World War I.6 In the absence of any overall data for east-west trade in the period, statistics of the traffic through the Suez Canal appear to offer an approximate index of the distribution of trade between various western nations and the Far East. In 1880 British ships made up 80 per cent of the total gross tonnage through the Canal, in 1890 76 per cent and 1910 62 per cent, but these figures dwarfed all rivals. In 1910 the German share had risen to 16 per cent but France and Holland were only 5 per cent each and Austria-Hungary 4 per cent. Much of US imports from the east went through Britain.7 Moreover the global importance of Britain in trade is understated by these figures inasmuch as the finance of world trade was orchestrated in London and sterling was the main currency of international finance. British supremacy was not based on the same factors through the period. For the first three-quarters of the eighteenth century it was largely founded on the rapidly developing 'Atlantic economy' (the trade with British colonies in North America); between 1700 and 1773 the trade to America and Africa multiplied 7.75 times while that to continental Europe increased only 1.13 times. The American War of Independence dislocated this trade but when peace was restored the upward trend was quickly resumed. An overlapping phase of development appeared during the early period of the British 6

7

B. R. Mitchell and P. Deane, Abstract of British Historical Statistics (Cambridge 1962) Table xi.3. R. M. Robertson, History of the American Economy (third edn, New York 1973) p. 364. S. Nishimura, The Decline of Inland Bills of Exchange (Cambridge 1971) esp. Table 15. M. E. Fletcher, 'The Suez Canal and World Shipping 1867-1914', JnlEcon. Hist, xvm (1958).

Introduction Table 0.4. Geographical distribution of UK exports and imports 1785-1845 [per cent) (1785-1815 England, Scotland and Wales only) 1785

1805

1825

1845

Europe

exports imports

4 6< 9

44*2

46-1

438

458

40-6

44'4 368

25-8

26-1 IO'I

• 8-3 16'O

16-5 239

N. America

exports imports

T4

Latin America and West Indies

exports imports

10-3

197

22*3

H'9

225

270

2O"5

132

11-6 214

19-8 194

n

66

Asia and Near East

exports imports

12-8

6-9

25*6

16*3

4'2 07

07

Africa and Australia

exports imports

3'1

4"4

Source: calculated from Ralph Davis, The Industrial Revolution and British Overseas

Trade (Leicester 1979) Tables 38-40. The data represent an average of three years i.e. 1784 — 6, 1804 — 6, 1824-6. Exports include re-exports. The geographical sectors are assembled to harmonise with those of Paul Bairoch in Table 0-5.

Industrial Revolution when the export of textiles (and especially cottons) increased rapidly, and from the beginning of the nineteenth century to the mid-1840s cottons represented 40 to 50 per cent of all British exports. The greatest impact was initially on the European market, which took around 60 per cent of cotton exports at the end of the Napoleonic War (1815) and 30 per cent in 1855 (Table 0.4).8 A third phase began as Europe and the United States responded to British industrialisation by tariffs and adaptation to the new techniques of production. As ocean freight rates and marine insurance rates declined it became economical to draw bulk commodities (basic foodstuffs and raw materials) from distant continents and so generate exchange there. British textiles and other manufactured goods were increasingly directed to markets in the Middle East, Latin America, India, China and the Far East 8

R. Davis, The Industrial Revolution and British Overseas Trade (Leicester 1979) pp. 13-14.

Introduction

7

generally; of these destinations India proved much the most important. By 1910 these export markets had become more important than those of Europe and North America (Table 0.5). From 1845 British law placed no restrictions on the export of machinery, and capital goods began to appear a significant component of exports. In the main period of British industrial expansion (1780s—1870s), imports of foreign manufacturers were pretty well eliminated in favour of the cheaper (and often better) home produced goods so that British trade became very largely a business of exporting manufactures in exchange for foodstuffs and raw materials. Inevitably the industrialisation of the United States, Germany and France led to growing imports of manufactured goods from these countries (particularly as Britain was wedded to free trade), but the shift to newer areas of trade served to sustain the opportunities of exporting industrial products in exchange for food and raw materials, with trade deficits with the new manufacturing countries bridged by surpluses in trade with new countries.9 This broad outline of British trade is already familiar from several authoritative studies and does not call for addition or refinement here. The aim of the present study is to identify the enterprise and organisation behind these changing patterns, and to examine the motivation and culture of mercantile enterprise from the Industrial Revolution to World War I. This is no easy task for, banks and insurance companies apart, the service industries have left even fewer records than those that produced goods, but patient synthesis of materials from sources in Britain and abroad reveals some interesting patterns suggesting new interpretations of British economic history. THE INDUSTRIAL REVOLUTION AND MERCHANTS

In the period of British deindustrialisation in the 1980s it became fashionable for historians to contrast the varying fortunes of industry on the one side and commerce and finance on the other, treating the first as if it has been the victim of the prejudices of the second, a group that over a long historical period had represented power, wealth, privilege, metropolitan life and conservatism. The most popular exponent of this view is probably Martin J. Wiener's English 9

R. Davis, Industrial Revolution, p. 36. D. C. North, 'Ocean Freight Rates and Economic Development 1750-1913', Jnl Econ. Hist, xvm (1958). B.R.Mitchell and P. Deane, Historical Statistics, Ch. xi.

8

Introduction

Table 0.5. Geographical destination of UK exports and imports i860—ig 10 [per cent) i860

1880

1910

34'3 31-0

35*6 414

45 !

16-6 267

15*9 39

238

I2'0

10*2 6l

I2"6

IOI

Europe

exports imports

35'2

jV. America

exports imports

1 r6

Latin America and West Indies

exports imports

9i

Asia and Near East

exports imports

257

25'4

25'4

232

I2O

103

11-4

127

16-o

90

96

117

Africa and Australia

exports imports

Source: extracted from Paul Bairoch, Commerce exterieure et developpement economique de UEurope au XIXe siecle (Paris 1976).

Culture and the Decline of the Industrial Spirit. Wiener has picked on the

sporadic infighting between City financiers and provincial manufacturers and exaggerated it until he writes of the industrialist as ' the legatee of an aborted rebellion against the standards of " upper Englishry", standards that refused to take the processes of material production quite seriously'.10 He makes no distinction between finance and trade. However, the subject has been taken up by two British economic historians, Dr Cain and Professor Hopkins, in a major work of synthesis called 'Gentlemanly Capitalism and British Expansion Overseas', and here the emphasis is very much on the mercantile origins of the economic, social and political divide.11 The two authors argue that the period 1688—1945 possesses a fundamental unity in British history in the sense that the growth of the service sector based on the City of London and the South East of England governed the course of the nation's economic policy, Britain's presence overseas (formal and informal empire) and the 10 11

M. J. Wiener, English Culture and the Decline of the Industrial Spirit 1830-1980 (1985) p. 128. P. J. Gain and A. Hopkins, 'Gentlemanly Capitalism and British Expansion Overseas', Econ. Hist. Rev. xxxix (1986), XL (1987).

Introduction

9

course of industrial development. Employment in the service sector enjoyed higher status and rewards than that in industry and it had easier access to political influence. Trade and finance were the basic components of the service sector so this interpretation must be central to the subject matter of this book. The immediate implication is that the traditional British economic history that sees the eighteenth and nineteenth centuries' landscape dominated by the peaks of industrial production, with merchants and traders providing outlets for manufacturing enterprise, must give way to a dualism in which merchants are clearly identified as central figures rather than satellites. The Cain and Hopkins thesis is clearly too wide, and covers too long a period, to be adequately considered in this book. However, it will be possible to assemble evidence on the changing relationship between industrialists and merchants, and between the provinces and City, which is not always the same thing. The culture of'gentlemanly capitalism', taken in all its subtle dimensions, is also too large a concept to do justice to here, but examination of the extent to which immigrant merchant families retained their own identity and values which challenged the assumptions and conventions of the English 'Establishment' will assess the idea from another angle. The idea of ' gentlemanly capitalism' is not far from that of an 'aristocratic bourgeoisie' debated by historians of City finance.12 The starting point is often the passage in Walter Bagehot's Lombard Street (1873) where it is suggested that most City merchants 'have a good deal of leisure, for the life of a man of business who employs his own capital, and employs it nearly always in the same way, is by no means fully employed'.13 Bagehot saw this as the merchant's opportunity to become a director of one or more of the proliferating number of joint-stock companies (banks, insurance and railway companies), but Cain and Hopkins identify leisure as the means of drawing entrepreneurs away from manufacturing industry (which required more continuous and close attention) and providing time to promote political interests, while the ' aristocratic bourgeoisie' group focus on inclinations to an aristocratic life style and amateurishness in business, particularly in the second and subsequent generations. Bagehot's comment was made almost in parenthesis and, could he 12

S. D. Chapman, 'Aristocracy and Meritocracy in Merchant Banking', Brit. JnlSoc. xxxvn (1986), Y. Casis, 'Merchant Bankers and City Aristocracy', Brit. Jnl Soc. (1988) and 13 Chapman's reply. W. Bagehot, Lombard Street (1973) 14th edn, pp. 240-5.

io

Introduction

have anticipated the attention it has attracted in the twentieth century, he would surely have taken more care to emphasise that 'leisure' was a product of ample capital and mature experience, and necessary for an international trader who needed time to study the implications of the constant shifts in the trading scene. The idea was better expressed by Samuel Smith, the senior partner in the leading Liverpool cotton brokers Smith, Edwards & Co. and Liverpool partner of James Finlay & Co., one of the most successful of the merchant houses in trade with India. He was a Liberal Member of Parliament from 1882 until his death in 1906 and his words no doubt reflect some of the conventional wisdom of the merchant community at the period: The head of a great firm dealing with foreign countries needs to be a statesman, an economist, and a financier, as well as a merchant. He must have the power of taking a bird's-eye view of the whole situation; like the general of an army, and like all great commanders, he must be able to discern talent, and promote it to high position. Afirst-classmerchant does not burden his mind with a multitude of details, and is always seemingly at leisure, while intent upon great issues. Many such men have I known in the

course of my life. The old British merchant as I remember him before the days of syndicates and limited liability, was often a truly great man, honourable, far-sighted, enterprising, yet withal prudent and cautious; simple in his life, and temperate in all things. The great fabric of British trade was built on these foundations.14 (author's italics) Smith wrote nostalgically as an old man, fearing that the accepted norms of his best years were under threat, but there was some substance in his interpretation inasmuch as twentieth-century management school studies emphasise the necessity for chief executives to have time to reflect on major policy issues. The three approaches to understanding mercantile business indicated here - that of 'gentlemanly capitalism', the 'aristocratic bourgeoisie' and what may be called Smith's chief executive - all appear plausible in their different ways and all claim a volume of empirical support. They are not mutually exclusive but their relative importance needs to be assessed as far as the evidence will allow. Each of their exponents offers one approach as a key to understanding mercantile performance in the period so must be carefully considered in the present study. 14

Samuel Smith, My Life Work (1902) p. 36. For a short account of Smith's career see Ch. 7.

Introduction

n

COSMOPOLITAN CULTURE

Economists have traditionally taken only limited interest in entrepreneurship on the grounds that their subject is about rational choices in the production and distribution of goods and services rather than about dimensions of personality. However there is now an economic theory of the entrepreneur distinct from mainstream neoclassical economics and this recognises the relevance of culture to the varying performance of firms and of national economies. The contribution of the distinctive cultures of the US and Japan to their successive dominance of world trade this century is apparent to the most casual observer, and a moment's reflection suggests that it could be no less important in the historical context. In a stimulating essay on ' Entrepreneurial Culture as Competitive Advantage', Mark Casson, one of the foremost exponents of entrepreneurial theory, has proposed the analysis of cultural attitudes to synthesise an entrepreneurial rating for various countries competing in international trade such as the UK, USA, Japan, Germany, France and Italy. The constituents of the different entrepreneurial cultures include factors such as scientific attitude, decision-making process and 'voluntarism' (attitudes to government) that are readily appreciated but practically impossible to measure, at any rate in an historical context. However, some simplified version adapted to our needs may clarify initial understanding.15 In the eighteenth and nineteenth centuries the theatre for the various trading cultures was the great cities and ports where merchants competed for trade. An international metropolis, as Fernand Braudel showed in his great work Civilisation and Capitalism from the Fifteenth to the Eighteenth Centuries, always attracts cosmo-

politan immigrants, and as London succeeded Amsterdam as the dominant capitalist city of Europe, its trading community became a more heterogeneous mix of races than it had ever been.16 Of course, the origins of the migrants changed; in the eighteenth century it was mainly Huguenots, Dutch and Sephardic Jews, in the nineteenth century Germans (including German Jews), Greeks and Americans, especially those of Protestant Irish origin. Other distinctive merchant 15

16

Mark Casson, Enterprise and Competitiveness: A Systems View of International Business (Oxford 1990) Ch. 4. F. Braudel, Civilisation and Capitalism, m The Perspective of the World (1981) pp. 30-1.

12

Introduction

cultures were formed within Britain, particularly those of the religious dissenters and the Scots. Together these various ethnic and religious groups play a major part in the study of mercantile enterprise in Britain in the period. Their varying cultural attributes, so far as mercantile success was concerned, can be evaluated under such headings as moral probity, discipline, family and group loyalty, achievement ethic and the degree of inward or outward looking objectivity. (The last idea, which springs from Casson, refers to the extent to which the decision-making members of the firm give their priorities to some ' internal' ideal such as equality of rewards or participatory decision making, or to an aggressive stance towards rival firms and groups.) Sadly, we lack sufficiently detailed evidence to attribute any numerical valuation to these factors, but their importance will be considered from literary evidence. The foreign merchants who flocked to London and its provincial rivals in the nineteenth century were not of course on the scale of the hordes that crossed the Atlantic to people the New World. Merchant strategy was planned and controlled carefully by men of capital to extend their international trading networks. Typically a trusted son or a clerk earmarked by his talent for early promotion to a partnership was sent to test his metal; not unusually it happened that the fortunate emissary succeeded beyond his father's (or principal's) most sanguine expectations, and before long London or Manchester exchanged places with the home town as centre and satellite of the family's trading activities. Old loyalties and new cultures were fused to create a supra-national outlook.17 Dr Charles Jones of Warwick University coined the phrase 'cosmopolitan bourgeoisie' for the international trading community that played such an important role in British life last century. He writes of a system 'in which ethnicity and nationality were not the primary determinants of status and where authority over enterprise remained quite decentralised without any apparent sacrifice of the growing economies to be derived from a centralised system of credit and information based upon the London market'. 18 It is easy to accept that this had emerged by the middle of the nineteenth century, but more difficult to share his view, as we shall see, that the outlook of the international merchant houses was subverted by nationalism and imperialism before the end of the century. Much depended on 17 18

See below, Ch. 5. Charles A.Jones, International Business in the Nineteenth Century (1987) p. 94.

Introduction

13

location. Moreover, it must always be borne in mind that the international merchant houses were only part of the British trading scene. As the century advanced, a larger portion of British trade concentrated on India and South Africa where the outlook of most of the firms was never so cosmopolitan as the immigrant firms, but great imperial ports like Hong Kong maintained their cosmopolitan milieu. Apart from tracing the emergence and contributions of the various trading migrants to London, the cosmopolitan approach must prompt the question of what is a British merchant house in the period. As Dr B. R. Tomlinson, a historian of British economic enterprise in India puts it, 'it is not at all clear that "British" is a meaningful collective adjective to apply to individual firms, or groups of companies, that happened to be owned or run by citizens of the United Kingdom'. 19 Beyond that, there is the problem of centralisation versus local decision making: did the success of mercantile enterprise depend on the former or the latter, or were there strategies to combine the best elements of both? These are topics that will recur through the book and to which we will return in conclusion. TRADE AND EMPIRE

The interpretation of British economic history just referred to has the further merit of bringing imperialism back into the centre of the picture. The British Empire was not built up simply as a tool of international diplomacy or as the opportunity for off-loading surplus manufactures; it is to be seen rather as a long-term and continuous aspect of the strategy of British mercantile capitalism. The only general thesis on the performance of British merchants compared with foreign competitors is that developed by D. C. M. Platt in his Latin America and British Trade 1806—igi4. Platt readily acknowledges

the ascendancy of German merchants over British firms in Latin America during the course of the century but denies this is evidence of overall decline or failure. He used the extensive series of British consular reports and the experiences of several well-known trading firms to show that as competition intensified British strategy was to concentrate business under the British flag, where there was ample room for growth without the high risks associated with unstable 19

B. R. Tomlinson, 'British Business in India i860-1970', in R. P. T. Davenport-Hines and Geoffrey Jones, eds., British Business in Asia since i860 (1989) p. 113.

14

Introduction

political regimes, erratic consumer demand and perhaps discrimination against foreigners. The British had a greater choice of markets than the Germans and by degrees withdrew from those where conditions were more difficult. Platt concludes that British withdrawal from Latin America was not symptomatic of a general worldwide decline in Britain's competitive power but of a deliberate refining of strategy.20 Recent research on British trade with Tsarist Russia has served to lend support to Platt's thesis. British merchants took an early lead in Russian trade and in the eighteenth century they succeeded the Dutch as the premier mercantile community in St Petersburg. However in the next century it became increasingly clear that the Germans had greater advantages in this market, and the British houses that survived there gradually diversified into more secure and profitable markets. The old houses that maintained a foothold concentrated on finance of trade, while the 'British' firms that continued active in the import-export business were characteristically newer enterprises of Anglo-German origin, and maintained close family and business connections in Germany.21 There has been as yet no direct challenge to Platt's thesis and, initially at least, some support. The pioneer investigator of the history of British multinational companies, J. M. Stopford, maintained that during the years of the so-called Great Depression (1873-96) the Empire was a market of least resistance to British firms. However, a more recent researcher of this type of business organisation, S. J. Nicholas, using evidence from a slightly larger group of firms, takes a different view, and also links multinational enterprise with the shortcomings of merchant houses. He suggests that direct investment in overseas manufacturing was the consequence of problems in selling through merchants. Such manufacturing enterprise was no more evident in the Empire than in nonimperial territories, he insists, so perhaps the merchant enterprise that preceded it was also impartially distributed? Conceivably the manufacturers who started producing overseas did so where British mercantile enterprise was weaker, or perhaps their activities simply followed the patterns of existing trading activities established by 20 21

D . C. M . Platt, Latin America and British Trade 1806-igi4 (1972). S. Thompstone, 'The Organisation and Financing of Anglo-Russian Trade before 1914', Ph.D. thesis, London 1992.

Introduction

15

merchant houses. There is certainly a major issue here to be investigated.22 There is also a challenge here to examine these developments from the perspective of those merchants that relocated or concentrated their activities on the imperial territories. What advantages were realised, and was their performance superior to foreign merchants trading in independent territories ? Did the Empire provide a cocoon that shielded British merchants from the stimulation of competition? Such questions will recur as the different arms of British enterprise are considered in turn. DISAPPEARANCE OR RE GENERATION f

In 1903 a sober periodical, The Statist, pronounced that 'the great merchant of former times has become unnecessary, and therefore is rapidly ceasing to exist'. The revolution in communications, it was argued, had effectively cut out the chain of middlemen between the producer and the retailer. The nineteenth century can be seen in retrospect as a long transitional period in which, as it proved less and less necessary to hold large stocks of goods, the initiative shifted to those who could satisfy demand without tying up resources in warehouses and idle inventory capital.23 The logic of the argument suggests that, by the end of the period considered, mercantile activity must have effectively disappeared except perhaps in a few anachronistic or peripheral areas. Merchants had been graduating to other occupations for centuries. More than a generation ago, the doyen of economic history of the time, T. S. Ashton, showed that in the eighteenth century the progression of merchants was generally from trading in commodities to dealing in money and shares.24 More recently economic historians have been tracing some of the paths of merchant migration into finance in the nineteenth century; they were evidently the most important element in the establishment of merchant banks in London and British imperial banks and international banks at home and abroad. They contributed powerfully, as brokers and 22

23 24

J. M. Stopford, 'The Origins of British-based Multinational Manufacturing Enterprise', Bus. Hist. Rev. XLVIII (1974). S. J. Nicholas, 'Agency Contracts, Institutional Modes and the Transition to Foreign Direct Investment by British Manufacturing Multinationals before 1939', Jnl Econ. Hist, XLIII (1983). S. N i s h i m u r a , Inland Bills of Exchange p p . 7 7 - 9 . T. S. Ashton, An Economic History of England. The Eighteenth Century (1959) p. 138.

16

Introduction

syndicates, to the development of Lloyds insurance market and to the establishment of country banks and joint-stock banks.25 But this traditional graduation into 'pure finance' has nothing to do with merchant loss of business into manufacturers' direct sales. Moreover, a distinction has to be made between goods in international trade that were simple and standardised (e.g. grain, cotton, timber) and those that were complex, innovative or perishable, and so required close contact between producer and consumer.26 Inevitably the growth of the second class in world trade limited the scope of the traditional merchant, but it was not an area in which British manufacturers were conspicuously strong. The rapidly growing world market offered vast scope in bulk products, and in any event there were ways in which merchants and manufacturers could unite. So while merchants faced direct challenges and were often drawn into financial specialisms, there is also evidence of continuity and of regeneration. The membership of the Manchester Royal Exchange, for instance, which represented the country's cotton piece goods and yarn exporters, maintained its upward trend until 1925.27 In the course of this book it will be seen that the cotton merchants were only one of diverse forms of specialised trading enterprise that multiplied in Britain through the nineteenth century. Among the most prominent were the 'international houses', the misnamed 'home trade houses' and the so called 'agency houses', each of which covered a plethora of activities.28 Nevertheless, there can be no doubt that the later years of the period covered by this book saw British manufacturers directly active overseas and bypassing traditional organisation. Nicholas identifies five stages of development of overseas involvement by British multinationals: (1) exporting through merchant houses on a commission basis with no exclusive agreements, (2) exclusive agency agreements with merchants houses, (3) foreign travellers (representatives) employed by the home firm, (4) selling overseas through sales subsidiaries, and (5) direct investment in foreign production. Twenty-one British multinationals examined developed on something like this pattern, and they included several leaders of the 25

S. D . C h a p m a n , The Rise of Merchant Banking (1984). Geoffrey Jones, History of the British International Banks (forthcoming). R . Clews, ed., A Textbook of Insurance Broking (1980) Ch.

26

G. Porter and H . C. Livesay, Merchants and Manufacturers. Studies in the Changing Structure of Nineteenth-Century Marketing. (Baltimore 1971) Ch. 1. D. A. Farnie, 'An Index of Commercial Activity: the Membership of the Manchester 28 Royal Exchange 1809-1948', Bus. Hist, xxi (1979). See below, Chs. 4, 5, 6.

27

Introduction

17

various sectors of British industry. Nicholas's model implies that this was in some way a representative experience from the late nineteenth century to 1939, and readers will infer that the period saw multinationals supersede merchants. However, he is the first to recognise the limitation of his 'nonrandom sample' and call for further enquiry.29 Setting multinational enterprise in the context of the longer period of history of mercantile enterprise, rather than seeing merchants as the prelude to multinationals, will provide another approach to the problem. Stated more simply, this book has two aims. First it is intended to identify the origins, types and dispersion of merchant enterprise in a century of unprecedented opportunities and challenges. Secondly it aims to evaluate its performance in relation to competition at home and abroad, and from new forms of business organisation active in overseas sourcing and marketing. The record of achievement or failure must be highly relevant to any assessment of British experience yesterday or today, whether in capitalism, industrialism, imperialism, social elites, enterprise cultures or any of a host of other problems that continues to occupy everyone interested in the history of the British economy. 29

S. J. Nicholas, 'Agency Contracts'.

PART I

The setting

CHAPTER

I

The eighteenth-century structure of merchant enterprise

There is a large literature on British merchants and their diverse enterprises in the eighteenth century, and much academic expertise has been invested in calculating and evaluating the growing volume and value of trade in the period.1 If this scholarship has a limitation, it must be its parochialism, at any rate compared with Fernand Braudel's work Civilisation and Capitalism} As the focus of this book is on the changes brought by the Industrial Revolution and the age of the telegraph and rapid communication, it will only be necessary to identify the salient features of merchant activity in the earlier period, especially those that have a particular bearing on subsequent changes. The most important of these are thought to be the early emergence of merchants as an economic and social elite, the major role played by migrants from the Continent and the domination of London in the commerce of Britain, the important role played by Dissenter networks in trade, and the ways in which the high risk of overseas trade made for high turnover of firms and renewal of enterprise. Much of the research on these topics has focused on particular firms, trades, ethnic groups and ports and an attempt will be made, where possible, to evaluate the overall significance of these features. However, the main purpose of this chapter is to provide a backcloth for the changes considered in the rest of the book 1

2

See especially E. B. Schumpeter, English Overseas Trade Statistics i6gj-i8o8 (i960); R. Davis, The Rise of the English Shipping Industry in the Seventeenth and Eighteenth Centuries (1962); R. B. Westerfield, Middlemen in English Business 1660-1760 (New H a v e n 1915); J- M . Price, Capital and Credit in British Overseas Trade. The View from the Chesapeake ijoo—ijj6 (Cambridge, Mass., 1980). F. Braudel. Civilisation and Capitalism from the Fifteenth to the Eighteenth Centuries. 11. The Wheels of Commerce (1982).

21

The setting

22

Table i. i. Estimates of mercantile incomes in England in the eighteenth century King 1688 No. of families

Merchants (0 Merchants (2) Merchants (3)

2,000

8,ooo

Totals

income

(£) 4OO 200

Massie 1759 No. of families

income

1,000 2,000 10,000

600 400 200

13,000

{£)

Colquhoun 1803 No. of families

income

2,000 13,000

2,6OO 8OO

{£)

15,000

10,000

Source: original estimates assembled and examined in P. H. Lindert and J. G. Williamson, 'Revising England's Social Tables 1688-1812', Explorations in Economic History xix (1982) 385-408. OPEN ELITES

There are unfortunately no truly authoritative estimates of the numbers, wealth or incomes of merchants in eighteenth-century Britain. As trade increased nearly six times during the course of the century we should reasonably expect the numbers and capital to increase significantly, but figures are difficult to obtain.3 The nearest we can come to specific evidence for the country as a whole are the well-known contemporary estimates of King (1688), Massie (1759) and Colquhoun (1803), the relevant parts of which are assembled in Table 1.1. None of the three defined the classes of merchants which they listed, and Massie evidently had a rather different concept in mind to the other two. Nevertheless, with support from other evidence, some reasonable inferences can be drawn from this very limited data. The number of merchants was rising, but apparently not nearly so fast as the volume and value of overseas trade. Secondly, the number of first class merchants in Massie's list looks similar to that in Mortimer's directory for London in 1763 (Table 1.2) and we may have a shrewd suspicion that his estimate was based on a similar source. Some evidence presented below suggests that trade was being concentrated in fewer hands down to about 1775 (the American Revolution) and increased again with the momentum of the Industrial Revolution so the top line figures are 3

E. B. Schumpeter, Trade Statistics, pp. 15-16. The calculation of'trade' includes imports, exports and re-exports.

Eighteenth-century structure of merchant enterprise

23

Table 1.2. Analysis of Mortimer's Universal Director {1763) Nos.

/o

978-5 3375 1,316-0

74*35 25-64

Total numbers listed

Merchants Factors

100

International composition

British surnames Foreign surnames

303

23

1,013 1,316

100

77

Sector of international trade

West Indian East Indian New England Virginia, Maryland, Carolina

49

11-17

18

10-15

4'9o 26|

26-22

"5

l rH| a n d B. Williams, Manchester Jewry, passim. 132

166

New streams of enterprise

the Dutch Consul in Liverpool, speculated in cotton backed by his Amsterdam and New York family, Labouchere (late of Hope & Co.), Barings and others, but failed for some £70,000 in 1829.135 Da Costa, the Portuguese Consul at Liverpool, failed twice.136 The international Huguenot families maintained a commanding position in Frankfurt well into the nineteenth century, but in Britain they faded out during, or soon after, the French Wars, except in a few cases where they had united themselves with German trading families.137 Their only distinguished successor was Franciso de Lizardi & Co., who had offices in Paris, London, Liverpool and New Orleans, and was heavily involved in financing the transatlantic cotton trade, but he was not French by birth.138 A handful of French, Italian and Spanish commission agents settled in Manchester and Liverpool, but they do not appear to have achieved any eminence.139 We may conclude, therefore, that the international houses played an important part in the development of the British economy, not only because of their enterprise and commercial expertise, but also because of their family-centred loyalties. They increased industrial prosperity by stimulating the local manufacturers to make fabrics, hardware and other goods most suited to their own home areas and the markets where they were familiar with the local terrain. Their judicious buying helped to smooth the momentum of industrial advance because they made their purchases when prices were low and the rest of the market slack.140 And finally, their migration brought valuable reserves of entrepreneurial experience to Britain at a period when resources of enterprise were extended and bankruptcy was regularly depleting the ranks of the mercantile class. The industrialisation of Britain was a genuinely international process, in which Germans, Greeks, American Irish and a smattering of other races (Dutch, French, Italians and others) contributed their expertise, much as British enterprise was contributing to the development of commerce and industry on the Continent and in the newly developing regions of the world. 135

136 137

138 139 140

B. of E. L'pool ltrs, 21 Sept., 1 Oct. 1829. J. A. Willink letter books, 1817-19, 1826-8, New York, Historical Society, for further details of the family. B. of E. L'pool ltrs, 24 Jan. 1829. [Anon.], Geschichte der Handelskammer zu Frankfurt a.M., esp. pp. 103-11. English Huguenots in H . L u t h y , La Banque protestante, 11, checked in L o n d o n directories. B. Gille, Rothschild, 1, p . 403, B. of E. L'pool ltr bks, x (1849), p . 159. Their names are listed in J. Scholes, 'Foreign Merchants in Manchester'. Rothschild letter books, 1 8 0 0 - 5 ; J . J a m e s , Worsted Manufacture, p . 4 1 1 .

CHAPTER 6

The home trade houses

One of the apparent anomalies of economic history is the continued development of London as a major centre of the textile trade through the eighteenth and nineteenth centuries. Textile manufacturing largely deserted the metropolis during the Industrial Revolution period, slipping away to a variety of regional settings. The northern regions soon raised their own trading centres — Manchester, Leeds, Glasgow, Nottingham and others, but London was never entirely eclipsed. Of course, the sheer size of London's population and the concentration of wealth, fashion and conspicuous consumption in the capital inevitably sustained an entrepot trade, but there was more to London's role than this. The textile sector of the City of London, the narrow streets between Wood Street and St Paul's churchyard, evidently retained a momentum of its own, both in its particular forms of enterprise and its relations with the provinces. Strangely enough, no one has ever attempted to piece together the story of this enterprise, at any rate not beyond the period of Defoe's classic account. Perhaps this is mainly for want of material, for most of the evidence was lost in the blitz, but it is possible to discern some of the salient features of change in the textile market in the two centuries after Defoe. PHASES OF CHANGE

The records are unusually thin, but it does seem possible to identify five distinct organisational patterns that succeeded each other as London struggled to accommodate itself to changes in the manufacturing centre and the rise of new rivals in the north. This framework is admittedly tentative, but it will at least aid understanding of the details assembled in this chapter. The sequence of systems is as follows:

168

New streams of enterprise

1i) The Blackwell Hall period The rise of the domestic system in the later middle ages saw provincial organisers (verlegers) focussing on the various London markets. These markets served not only the population of the capital but, increasingly, shopkeepers and dealers who came to London to buy their stocks. This is the system so strikingly portrayed, at a mature period of its development, by Defoe, and in our own century by R. B. Westerfield.1 So far as we are aware, there was no particular dominant party in the distributive chain; indeed the system recalls that of the constitutional system of checks and balances in which the eighteenth century rejoiced. However, London was undoubtedly the fulcrum of the system and London merchants much the richest and most numerous in the land. (2) The Lancashire period The second half of the eighteenth century saw not only the dramatic rise of the factory system in cotton, but with it the rapid emergence of a class of successful mill owners who became merchants. For more than half a century (c. 1760-1815), the northern manufacturer-merchants set the pace, though Liverpool and Manchester did not supersede the capital much before the end of the century.2 (3) The Morrison period, c. 1820—63 The commercial tribulations of the Napoleonic War and postwar depression ruined or enervated much of the first generation of northern producers, and the post-war depression saw calamitous overproduction and tumbling prices.3 In this climate, a group of opportunist London drapers led by James Morrison seized the initiative, establishing a new style of high turnover warehouse. The northern manufacturers never regained the marketing initiative, but a handful of Manchester warehousemen imitated the London system. (4) The wholesalers {Rylands and Morley) period c. 1865-^40 Ultimately the most successful of the great warehousing concerns were Cookes and I. & R. Morley in London and John 1

2

3

D.Defoe, A Tour through the Whole Island of Great Britain (1724-6). R. B. Westerfield, Middlemen in English Business 1660-1760 (New Haven 1915) Ch. 5. M. M. Edwards, The Growth of the British Cotton Trade 1780-1815 (Manchester 1967) esp. pp. 107-11, 1476°. S. D. Chapman, 'British Marketing Enterprise; the Changing Roles of Merchants, Manufacturers and Financiers 1700-1860', Bus. Hist. Rev., LIII (1979).

Systems

Manufacturers

Retailers

Merchants

Blackwell Hall sixteenth-eighteenth centuries

Domestic production

Sales

London market

Sales

Mill owners c. 1760-c. 1815

Domestic system +Mill owners

Sales

Manchester, Leeds and London market

Sales

Cheap warehousing c. 1820-c. 1860

Factories + domestic system

Orders

London wholesalers

Great wholesalers c. 1865-1926

Provincial factories

Orders

London wholesalers

Sales

Drapers + departmental stores

Big retailers twentieth century

Provincial factories

Orders

Retailer's warehouse

Orders

Departmentals + variety chain stores

w.

Sales cr.

Fairs, markets, pedlars, shops

Fairs, markets, pedlars, shops

Mercers drapers

Key: the heavy box shows the strongest element in the chain at each period, the outer rectangles where functions were often integrated. Figure 6. i. The evolution of distributive systems in the textile industries, sixteenth to twentieth centuries.

170

New streams of enterprise

Rylands & Co. in Manchester. In the second half of the nineteenth century these and other successful firms increased their grip on the trade by integrating backward into manufacturing, buying up factories during periods of depression in trade. They generally succeeded in keeping the manufacturers and retailers well apart, despite a few challenges from 'upmarket' producers. (5) The variety chain store {Marks and Spencer) period, ig26 to date

Growth in the scale of retailing, and much improving communications, evidently offered the possibility of direct links between manufacturers and the great stores from at least the end of last century. Grocers, chemists and other variety chain stores are known to have dealt directly with their respective producers,4 but it was not until Marks & Spencer took the initiative in the 1920s that the warehousemen's control was challenged and then their control superseded. If this model is even approximately right, the London system not only survived through the nineteenth century but was probably most dominant then. The reasons for this remarkable situation must now be probed at greater depth, initially returning to our point of departure in the eighteenth century. PROVINCIAL INDUSTRIALISTS IN THE MARKET

One of the most familiar themes of English economic history in the seventeenth and eighteenth century is that of the development of regional specialisation of manufacturing to serve the London market.5 The textile industries evidently played a major role in this development, and there is a large bibliography on the growth of provincial manufacturing industry at this period, but the role of verlegers in marketing their goods in London has never been fully worked out. Are we to understand that the model was Samuel Oldknow, simply receiving and discharging orders from a London wholesale merchant?6 Or did provincial manufacturers take any direct initiatives in marketing in their principal domestic market? 4

5

6

Eg. P. Mathias, Retailing Revolution (1967), S. D. Chapman, Jesse Boot of Boots the Chemists (1974) pp. 91, 103. F. J. Fisher, 'The Development of London as a Centre of Conspicuous Consumption', Trans. Royal Hist. Soc, xxx (1948). G. Unwin, Samuel Oldknow and the Arkwrights (Manchester 1924) Ch. 4. See also M. M. Edwards, British Cotton Trade p. 150.

The home trade houses

171

Possibly the most complete information on the eighteenth century available at present is for the East Midlands hosiery industry. The fire insurance records make it possible to analyse the London connections of the seventy firms who controlled the Nottingham hosiery industry in 1770-5, showing that at least forty of them had some kind of permanent base in the City of London, mostly in rooms at the inns that formed the termini of the regular coach services. From mid-century there were at least ten coaches a week from London to both Nottingham and Leicester.7 It seems that the subsequent growth of the London market led more and more Midlands firms to seek permanent bases in the Wood Street area. These crowded streets were shared with a variety of other textile specialists, including warehousemen specialising in 'Manchester goods', in silks and ribbons, woollen goods and gloves. Others again dealt in variety and were content to be called general merchants and warehousemen. Their concentration in a small area comes out very well in the earliest complete street list, Johnstone's London Commercial Guide (1817), the details of which are set out in Table 6.1. Other premises were occupied by carriers, insurance brokers and others offering specialised services to the textile tradesmen. It is interesting to note that 20 of the hosiers can be connected with Nottingham, evidence of a continuing strong connection, but comparison with the 36 of 1770—5 in a period in which the provincial industry at least doubled in size indicates growing concentration of the trade in fewer hands. 8 The trade in 'Manchester goods' in London looks much smaller than that in hosiery and lace and silk goods; Michael Edwards notes that only the big Lancashire firms had their own warehouses in London, and most of the firms in Johnstone's lists were probably just agents for northern manufacturers.9 In part, the preponderance of hosiery, lace and silk may be interpreted as the continuance of a traditional connection between the East Midlands, Spitalfields and London, but it may also have something to do with the prominent role of such goods in the fashion trade, of which London continued to be the centre. There is no direct or very clear evidence of the size of these concerns, but such evidence as we have suggests that at the turn of the century they were still on a very small scale. The largest and most 7 8

R. Baldwin, A Complete Guide to... the City of London (1752, 1755, 1760, 1763 etc.). 9 Nottingham Directory, 1818. M. M. Edwards, British Cotton Trade, p. 148.

172

New streams of enterprise Table 6.1. London connections of Nottingham merchant hosiers

Permanent stock at London inns:

Cross Keys, Wood St Blossom, Laurence Lane Swan, Lad Lane Castle, Wood St Angel City warehouse or dwelling house City agent

13

8 1 1 1

24 12

4 40

Main market in Leeds, Glasgow No information {may have lodged at other inns)

2 28

7° Source: S. D. Chapman, 'Enterprise and Innovation in the British Hosiery Industry 1750-1850', Textile History v (1974) pp. 33-5.

enterprising of the Nottingham firms represented in the City at this time was that of the Hayne brothers, who specialised in lace net. One of the brothers kept a house in Wood Street, and large quantities of net were exported to France, but the domestic selling operation was apparently limited to two young men who went round the London drapers once a week, and to a single traveller in the provinces.10 It seems probable that Haynes' organisation was no larger than those of the leading City retail drapers. At this time, and for a generation or more, the City houses rather than the West End ones occupied the highest position in public estimation, and were not averse to doing some wholesale trade with lesser firms in the provinces.11 The Manchester warehouse region grew up in much the same way as that in London, in the yards of inns in the narrow streets of the old commercial centre. When the Universal British Directory was drawn up for Manchester about 1795, as many as 51 country manufacturers gave their address as New Boar's Head in Hyde's 10

11

Nottingham Univ. Lib. Archives, Kirk White MSS, C123, C166. For Hayne Bros, see G. Henson, History of the Framework Knitters (1835) PP- 3°4~l7W. H. Ablett, ed., Reminiscences of an Old Draper (1876) esp. pp. 58, 76. A. Adburgham, Shops and Shopping 1800-igi4 (1964) pp. 8-9.

The home trade houses

173

Cross, while there were 16 at the George and Dragon in Withy Grove, 15 at the Lower Ship in Salford and 13 each at the Griffin in Long Mill Gate and Higher Swan in Market Street Lane. Thirty other inns were the town home of from one to ten verlegers. At this date only the foremost country manufacturers had their own warehouse.12 The largest of them was quite possibly Arkwright's in Cromford Court, a four-storey building with weavers' windows, standing at the bottom of the court surrounded by the premises of satellite manufacturers.13 The yarn warehouses were probably little more than distribution depots for the benefit of the country manufacturers, and if we are interested in the diffusion of new innovation and fashion, the warehouses of the calico printers are no doubt more important. At any rate, it was Peels who initially set the standard in building purpose-built and prestigious warehouses as a means of attracting customers.14 This development put Manchester well in advance of London, but the typical merchant's enterprise evidently remained small. This view is supported by nineteenthcentury reminiscences of the small scale on which many Manchester merchant houses were operating at this period, which were quoted in Chapter 2. Selling by pattern was linked to 'the tally trade' and was evidently the reason for the continuance of the large number of small merchant houses at the period, both in Manchester and London.15 An explanation of the large number of small sales rooms - already more than 1,500 in 181516 — is also offered by the growing practice of Scots and Irish manufacturers, as well as the 'distant English manufacturers', of keeping a warehouse in Manchester. John and Peter Duncan, Dundee linen manufacturers, offer a striking illustration of the early pull of Manchester. Their father had a house in London in the same trade from 1811—15 but in 1824 the s o n s preferred to make Manchester their main outlet despite the easier access (by sea) to the metropolis. The Duncans' linens were sent to Manchester to be 'disposed of amongst an extensive country connexion, some of whom are waited upon by their travellers and 12 13 14 15

16

Universal British Directory, in (1795). J. Loudon, Manchester Memoirs (1916) p. 130. J. Ashton, A Picture of Manchester (1816) pp. 221-2. J. Mortimer, Mercantile Manchester, Past and Present (1896) p. 69. 'The Tally Trade', in J. R. McCulloch, Dictionary of Commerce, 11, p. n o . R. Lloyd Jones and M. J. Lewis, 'The Economic Structure of "Cottopolis" in 1815', Textile History, xvn (1986).

174

New streams of enterprise

others are in the habit of making their purchases in person... thus giving them an opportunity... of seeing the buyers in their line who are continually visiting this great emporium'. 17 The dispatches of the Bank of England branch managers in Manchester and Leeds support the general impression that home trade houses were rather late in developing; no doubt it was the railway network that really made Manchester's commercial sector. The earliest firm to obtain significant mention was Henry Bannerman & Sons, said to have been started by a wealthy Perthshire farmer and his three sons in the first decade of the century. In 1846, when the third generation had taken control, the firm was reported to have a capital, excluding its warehouses, of £160,000, perhaps £200,000 in all.18 Four years later, in 1850, John Rylands, the future doyen of the trade, was reported to employ £100,000 capital, half of it at his Gorton Mills, and to serve about 2,000 customers in the general and country trade. 19 Rylands was evidently an important man in the industry and trade, but his capital, fifty years after his family firm had been established, does not look anything extraordinary alongside some of Manchester's leading export merchants of the day. As early as 1829 H. J. & R. Barton had a capital of £470,000, while in 1847 Sir William Fielding had £360,000 and Robert Gardner £344,000.20 However, during the course of the next half century, Rylands & Co. increased the momentum of their growth; by 1897 fourteen more mills had been acquired, branches had been opened in Paris and Rio, and 20,000 customers bought over £3m. worth of goods. Other home trade houses - Bannermans, S. & J. Watts, Richard Haworth and A. & S. Henry - could not maintain this pace, and Rylands shortly appeared in a class of its own.21 Nevertheless, the firm offers a standard for comparison with the London firms, to which we may now return. 17 18

19 20 21

B. of E, Manchester letters, 27 Feb. and 2 Mar. 1836. B. of E. Mane, ltr bks, v (1846) p. 146. Q. Mortimer], Henry Bannerman & Sons Ltd (Manchester 1891). B. of E. Mane, ltr bks, vn (1850) p. 150. B. of E. Mane, ltrs 4 Apr. 1829, ltr bks vi (1847) pp. 159, 165. D. A. Farnie, 'John Rylands of Manchester', Bull, of the John Rylands Lib., LVI (1973). Guildhall Lib., Kleinwort Information Books, No. 184, p. 76. Records of Rylands & Sons Ltd at John Rylands Library.

The home trade houses

175

THE GREAT WHOLESALE HOUSES

The first generation of the Industrial Revolution undoubtedly saw a vigorous expansion of the northern merchant manufacturers at the expense of London, but this expansion lost some of its drive by the later years of the French Wars. Overseas trade proved ruinous to many sanguine inexperienced northerners, and the slimmer profits of the post-war years prevented the accumulation of manufacturing fortunes.22 Initiative now reverted to London, taking a new form appropriate to a period of overproduction and tumbling prices. The new system was at first called the ' Todd system' after its most successful exponents, Todd and Morrison (later Morrison, Dillon & Co).23 The most succinct account of James Morrison's technique appears in the autobiography of Sir John Bowring, and is worth quoting at length: Morrison told me that he owed all his prosperity to the discovery that the great art of mercantile traffic was to find sellers rather than buyers; that if you bought cheap, and satisfied yourself with only a fair profit, buyers - the best sort of buyers, those who have money to buy would come of themselves. He said he found houses engaged with a most expensive machinery, sending travellers about in all directions to seek orders and to effect sales, while he employed travellers to buy instead of to sell: and if they bought well, there was no fear of his effecting and advantageous sales. So, uniting this theory with another, that small profits and quick returns are more profitable in the long run than long credits with great gains, he established one of the largest and most lucrative concerns that has ever existed in London, and was entitled to a name which I have often heard applied to him, 'The Napoleon of Shopkeepers'.24

In the post-war depression it would not have been difficult to locate manufacturers anxious to unburden themselves of excess stocks. Morrison was related to Flints who were described in his biography as 'great ready money haberdashers' in London, from whom he probably acquired initial knowledge of northern suppliers as well as an appreciation of the benefits of fast turnover.25 In 1834 the Circular to Bankers explained the development of the system in a little more detail: 22 24

25

23 Circular to Bankers 15 Jan. 1836. Circular to Bankers 10 Oct. 1834. Quoted in R. Gatty, Portrait of a Merchant Prince. James Morrison iy8g-i8jy (privately published, Northallerton 1981) p. 23. R . G a t t y , James Morrison, p . 9.

176

New streams of enterprise

Morrison has made a large fortune, some say more than £im. sterling. There are a dozen or morefirmson the same system in London and doing well. These houses were able to establish themselves in this line of business through breaking down of the manufacturers owing to changes in the value of money. When the manufacturers' property began to diminish they made very ready use of the credit being offered to them to obtain their raw materials. They could maintain themselves for years by vending their goods under prime cost at the low-priced warehouses of London. Some bankruptcy cases showed that goods had been sold in large quantities at 2 5%~3°% below the fair ready money price. If goods could be purchased in this manner amounting to say one-fifth or one-seventh of a company's trade, and the total trade of the company was worth £1,200,000 to £1,500,000 this would be an abundant source of profit. This is how the first-established cheap-selling warehouses did it.26 The existence of credit on the supply side is confirmed by records of two smaller warehouses in the 1830s.27 The Morrison system was evidently continued for a good many years after the founder had gained his fortune. Daniel Puseley's Commercial Companion (i860) maintains that Morrison, Dillon & Co. was the ' most extensive and most eminent wholesale house of its class in the City of London', though now conducted by the son of the founder. The confidence in the house, Puseley maintained, was 'exemplified by the simple yet striking fact that the house... is the only extensive one of its class that has never had occasion, or deemed it requisite, to be represented in the provinces or elsewhere by travellers or agents of any class'.28 Actually the firm continued to have strong representation in the provinces, but by buyers ('confidential agents') rather than by salesmen. Giving evidence to the government's Select Committee on the Trade Marks Bill in 1862, John Dillon, the managing partner, explained that his marketing was now principally conducted by extensive mailing of circulars, and that he had sometimes sent out as many as 2,500 to advertise goods bought by tender of bankrupt stock.29 No doubt the introduction of the penny post (1840) stimulated this kind of business. It is not difficult to identify several of Morrison's early competitors. In 1828 the Circular to Bankers remarked that 'We hear of 26 27

28 29

Circular to Bankers 10 O c t . 1834. N . B. H a r t e , A History of George Brettle & Co. Ltd 1801—1^84 (privately published, 1977) cites Moore, James & Co and Ward, Brettle & Ward as receiving and giving short periods of credit, apparently two months. D . Puseley, Commercial Companion ( i 8 6 0 ) p . 125. Sel. Comm. on Trade Marks Bill, Parl. P a p e r s , 1862, x n , p p . 5 4 3 - 4 .

The home trade houses

177

warehousemen who deal in the more showy, ornamental or more petty articles of attire and not much in the substantial parts of clothing, who severally make returns in trade amounting to £ i m . to £2m. per annum.' 30 This is an unmistakable reference to the two most energetic firms in the lace trade, James Fisher & Co. and Groucock, Copestake and Moore. Like most London warehousemen, James Fisher received his early training in retail drapery. He started on his own about 1800 and built rapidly on an early connection with John Heathcoat, the innovating entrepreneur in the manufacture of bobbin net lace. Despite this valuable advantage, it seems that he always employed a team of well-paid travellers. When Heathcoat's patent expired in 1823, Fisher built a large lace factory in Nottingham and in the 1830s contrived to dominate the trade by taking out a sequence of patents in the name of his chief mechanic William Crofts. His London business reached its apogee, it is said, about 1845.31 Copestake, Moore & Co. was established and energetically built up by two of Fisher's most able staff. His northern traveller, George Moore, another product of the draper's shop, is celebrated in one of Samuel Smiles's later biographies.32 The history of the firm is evidently one of the growth of a sales force drilled by Moore, rising from four in 1830 to twenty-seven in 1852. Following Fisher's example, the firm built a factory in Nottingham in 1845. Notwithstanding the panegyric on Morrisons, Puseley wrote that Copestake, Crampton and Co. house was 'at present by far the largest of its class in the world'. 33 In the 1860s the firm employed over 300 men in their City warehouse, and comparison with I. & R. Morley (for which more complete data is available) suggests that annual sales may have exceeded £3.0111. a year.34 Evidently Morrison, Dillon & Co. were not slavishly followed by their closest rivals, and the few figures available suggest that Copestake, Moore & Co. drew substantially ahead in sales (Table 6.3). The available evidence suggests two possible reasons. One is that in the 1830s Morrison concentrated his attention on becoming 30 31 32 33 34

Circular to Bankers 17 O c t . 1828. W . Felkin, History of the Machine Wrought Hosiery and Lace Manufacturers (1867) C h . 22. S. Smiles, George Moore, Merchant and Philanthropist (1878). D . Puseley, Commercial Companion, p . 4 1 . S. Smiles, George Moore, p . 287. I. & R. Morley employed 100 men for an annual turnover of j£i.om. (see below) while Copestake & Moore employed 300 men at a nearby London warehouse.

178

New streams of enterprise Table 6.2. The City of London textile market in i8iy ManHosiery Silk & Chester Woollen Other General & lace ribbons goods goods Gloves textiles merchants Totals

Wood 35 Street Lawrence 2 Street Lad Lane 2 I Cateaton Street Alder4 manbury

24

3

6

5

2

10

85

2

8

i

—

2

14

39

I

2

i

4

12

3

9

— —

2

I

2

11

27

3

i

11

1

4

19

43

44

3i

28

6

12

5B

206

Source: Johnstone's Commercial Guide and Street Directory (1817). 97 other

tradesmen are listed in these fives small streets, including six carriers. The categories for occupations are variously given in the Directory eg. hosiery and lace includes firms describing themselves as manufacturers, Blackwell Hall factors, flannel warehouses etc. Manchester goods includes calico merchants, fustian manufacturers, cotton manufacturers and small-ware manufacturers.

a merchant banker but had to withdraw at the crisis of 1837, l° s m g a great deal of capital.35 The other is that in the long term the employment of commercial travellers proved more successful in generating new business than the cut-price system. In 1885, A. P. Allen, the author of an early and best-selling book on travellers, wrote: Only a few years ago there were houses which prided themselves on doing a magnificent business without a single representative. This was no vain boast, but they, like others, have succumbed to the inevitable law, and I am not aware that there are more than one or two houses of any repute that can command any large amount of business without the aid of a commercial traveller.36 Unfortunately, very little is known about other London warehouses on the Morrison plan, beyond the fact that most emerged from the ranks of specialists. Among the leading houses, Cookes of St Paul's 35 36

Guildhall Lib. MSS. n , 705-7, Morrison Cryder letters. A . P . A l l e n , Ambassadors of Commerce ( 1 8 8 5 ) p . 1 0 6 .

The home trade houses

179

were originally carpet manufacturers and warehousemen while Leaf & Co. specialised in silks and ribbons. By 1866, Cookes already had thirty-one departments, each dealing with a different type of fabric; in 1874 Leafs had four. While many of the great London houses were founded at the end of the eighteenth century or in the early years of the nineteenth century, the impression gained is that they did not begin to grow rapidly until after mid-century. The growth of the railway network centring on London offers the most ready explanation, but relatively easy access to capital must also be considered. Certainly the London warehouses were amongst the earliest textile enterprises to take advantage of the opportunity of incorporation. Morrison, Dillon & Co. set the ball rolling by incorporating as the Fore Street Warehouse Co. in 1864, with a capital of £420,000. Only one of the original six directors bore either of the founders' names. Bradbury Greatorex & Co. followed in 1868, admitting 'a few gentlemen of capital and experience as shareholders'. Pawsons were incorporated in 1873, with the help of A. J. Mundella, who was I. & R. Morley's main rival in hosiery manufacture. Rylands incorporated in 1873 and the London Warehouse Co., led by John F. Pawson, the next year. Other firms remained private partnerships but saw amalgamations: I. & R. Morley took over Nevilles of Gresham Street in 1864 and the Midland Hosiery Co. in 1884, while Birkins, the leading Nottingham lace manufacturers, took over Fishers. At the manufacturing end, incorporation was scarcely considered before the Oldhams movement of the 1880s, and Lancashire firms characteristically remained short of capital. Leafs delayed incorporation until 1893 a n d l a ter admitted they had been acutely short of capital since 1874.37 The fashion historian Sarah Levitt has suggested that the London textile warehouses were most prominent in the supply of the fashionable embellishments to the characteristically plain dress — and especially men's dress — of Britain's Victorian epoch. She rests her case mainly on the records of Welch, Margetson & Co., who specialised in the supply of neckwear, but it seems to fit the experience of the lace warehouses just referred to, and perhaps also the hosiery and ribbon specialists, at any rate in their earlier years. 37

O. Blumenthal, British, Foreign & Colonial Trade Marks Directory (1866) p. 73. West Yorks R.O. C 149/958, Seyd & Co.s London Commercial List, 1877. C. M. Leaf, Walter Leaf 1852-192J (1932) p. 114. Modern London. The World's Metropolis. An Epitome of Results (c. 1887) p. 179, for Leaf & Co. Ltd.

180

New streams of enterprise

However, the policy of the most successful house, Morrison, Dillon & Co. was evidently laid on quite different foundations, and we must see how it is possible to reconcile the two traditions. Once again, evidence is inadequate but there are some indications of trends. The experience of Leaf & Co. is instructive. Not untypically of older houses, the firm started its life at the end of the eighteenth century as a haberdasher; a century later it specialised in silk, ribbons, velvet, crepe, dress goods, flowers and feathers. According to an advertisement article in Modern London: The World's Metropolis (c. 1893), 'The fashions of the day are the guiding influences of the firm's operations... It is with such firms as that of Messrs Leaf & Co Ltd that styles and fashions originate; and it is under their favouring influence and auspices that they reach the perfection of art and taste upon which we, of the present age, have a just right to pride ourselves.' This fulsome comment might be accepted as the last word on the subject but for the fact that Walter Leaf, the senior partner from 1874-1893, admitted in a posthumous autobiography that his firm spent these years struggling for survival and that Morrison Dillon & Co. were 'the great rival business'. This was no small concern; in 1879 the Bank of England recorded its capital as £500,000, which was quite as large as most merchant banks at the time. In 1891, and united with Pawsons, it was down to £354,000. No doubt much of the problem was the decline of the Spitalfields silk and Coventry ribbon industries, but Leafs had long had direct connections with silk factories in France, Germany, Switzerland, Italy and Austria, and there was time to adjust. The underlying cause was more likely the traditional commitment to the upper end of the market and the consequent need to find customers more akin to those served by Morrison and similar firms. Capital was short because of this major development.38 The burgeoning of departments in the leading houses, and the proliferation of lines in the trade catalogues of the later nineteenth century, can leave little doubt that the most successful houses aimed at the widest possible range of tastes and pockets. They liked to feature some of the latest modes, but the country drapers that they served represented a predominantly conservative market. The oldstyle drapers had to reach down the scale and the cheap-selling warehouses upwards, eventually serving much the same retail 38

C. M. Leaf, Walter Leaf, pp. i n , 114, 146. Modern London, p. 179. Bank of England Discount Applications 1877-91, C 29/23, 24.

The home trade houses

181

outlets, but there remained a long tail of smaller concerns, less ambitious or less ably conducted, that remained closer to one tradition or the other. MERCHANT DOMINATION

In the later Victorian years the British textile industry was dominated by merchants. In two generations of rapid growth, from the 1820s to the 1880s, they had become the undisputed kings of the textile business. After all that has been written about the Industrial Revolution in cotton, and in textiles generally, it may seem almost reactionary to assert that merchants rather than manufacturers ruled Britain's premier industry. The idea certainly requires some explanation. The economic power of the merchant class in this industry was the consequence of three factors. The disintegrated structure of the textile industry is well known. The British industry traditionally consisted of a large number of small (or small-to-middling) family firms with limited capital all making similar goods in conditions approximating to the economist's definition of perfect competition. Sporadic attempts to launch or forge integrated production (whether vertical or horizontal) made little impact on the overall scene before 1914,39 and on hosiery and knitwear before the 1960s. As a result, power was retained by the entrepreneurs controlling credit and marketing. The City of London textile market retained its leadership despite the rise of import trading centres in Manchester, Liverpool, Leeds, Bradford and Glasgow. Notwithstanding strong growth of financial specialisms in the City, merchanting continued to be more important until at least 1914, and within this sector textiles were much the most important single element.40 When the process of integration of family firms began at the end of last century, all the well-known groupings (J. & P. Coats, Fine Spinners & Doublers, the Calico Printers Association, Tootal Broadhurst Lee and others) were horizontal combinations. All the home trade and shipping (i.e. export) houses remained independent.41 39

40

The best bibliography of the extensive literature on the cotton industry in this period is in D. A. Farnie, The English Cotton Industry and the World Market 1815-cfi (Oxford 1979) pp. 329-84. S. D. Chapman, 'The Decline and Rise of Textile Merchanting 1880-1990', Bus. Hist. 41 XXXII (1990). R. Robson, The Cotton Industry in Britain (1957) Ch. iv.

182

New streams of enterprise

Merchant domination is not immediately obvious from the extensive literature because practically all the numerous writers on nineteenth and early twentieth-century textiles were primarily interested in production rather than trade and were based in the North of England rather than London. They regularly identified the fragmentation of the production process but scarcely anyone paused to consider finance and marketing. There are several biographies and a couple of histories of London textile merchant houses (more than of other centres) but they disclose little of how the system worked.42 Consequently most of the hard evidence must come from analysis of financial data. Table 6.3 assembles details of the capital of leading merchants at the apogee of their power about 1880. At this date there is nothing in manufacturing comparable in capital to the leading merchants, and when the great combines of Tootals, the C.P.A. and J. & P. Coats were assembled, it took some years for them to exploit their potential in marketing. In hosiery there was nothing on this scale until Wolsey was formed in 1920.43 Indeed, the biggest City and Manchester merchant houses compared in size with all but the biggest of the merchant banks, which have been recognised as the most powerful group in City finance. This is confirmed by Rubinstein's tabulations of millionaires and halfmillionaires, which contain scarcely any textile manufacturers but numerous merchants, especially in London.44 The calculations in Table 6.4 suggest the average capital of cotton mills about 1880. In a few instances we can focus instructively on particular merchant houses. I. & R. Morley's sales at the end of last century was about ten per cent of the total British production of hosiery and knitwear, and their capital was something like fifteen times that of the largest producer of knitted goods, N.M.C. 45 Morley's was not the biggest City textile warehouse (that was undoubtedly Cookes) but comparison with John Rylands (Manchester's biggest merchant) 42

43

44

45

R . G a t t y , James Morrison. S. Smiles, George Moore. E . H o d d e r , The Life of Samuel Morley (1888). C. M . Leaf, Walter Leaf. N . B. H a r t e , A History of George Brettle & Co. Ltd. 1801-1064 (1977). F . M . T h o m a s , /. & R . Morley, A Record of a Hundred Years (1900). Diet. Bus. Biography articles on J . D . Allcroft, Sir George Williams. Manchester P.L., Tootal Broadhurst Lee minute books, C.P.A. minute books. J. Hunter, History of J. & P. Coats (forthcoming). Wolsey Ltd. was incorporated with a capital of ^2.om. in 1920 (private records). S. D . C h a p m a n , The Rise of Merchant Banking (1984). W . D . Rubinstein, Men of Property (1981) p . 107. Lord Hollendon's estate office, Leigh, Kent: I. & R. Morley sales data and other records.

The home trade houses

183

Table 6.3. Capital of leading textile warehousesmen c. 1880 Year

Factories

London

Cooke, Son & Co. I. & R. Morley Dent, Allcroft & Co. Copestake, Crampton & Co. Leaf, Sons & Co. Fore Street Warehouse Co. Ltd, Bradbury Greatorex & Co. J. & C. Boyd Pawsons & Co. George Brettle & Co. Foster, Porter & Co. Ward, Sturt & Sharp Caldecott, Sons & Co. Crocker, Sons & Co. Devas, Routledge & Co. London Warehouse Co. Ltd. Dewar, Sons & Co. Ltd. Baggalays & Spence David Evans & Co. Welch, Margetson & Co.

c. 1880 c. 1880 1886 1880 1879 1880 1894 1880 1880 1882 1881 1878 1881 1881 1878 1874 1876 1881 1883

C. 2'0

1

c. 1-4 0-69 0-65

7 1 1

°'5 0*42 0-4

°'39 0-31 0-25

1

0*21 0'2 0-2

O'I 5 0*14 O*I I O*IO

o-io 0-05

1

nd

2

Provinces

John Rylands & Son, Manchester A. & S. Henry, Manchester Arthur & Co., Glasgow Thomas Adams & Co., Nott'm

1876 1889 1878 1877

i-3 ri I'2

0-13

l

5 3 3 1

Sources: Incorporated companies in Seyd & Co.'s London Commercial List (1877), copy in West Yorks R.O. C149/958. N. B. Harte, A History of George Brettle & Co. (1977) p. 103. John Rylands MSS, John Rylands University Library, J. F. Barclay, The Story of Arthur & Co. (Glasgow 1953) p. 50. Diet. Bus. Biog. 1, article on J. D. Allcroft. Partnership capital in Bank of England R.O., Discount Applications C29/23. Capital of Cooke, Son & Co and I. & R. Morley has been estimated from data on Cooke's sales and capital for 1920-40 (Courtaulds' Archives, Coventry) and Morleys' sales 1830-1926 (Lord Hollendon's Estate Office, Tonbridge, Kent).

shows the former were as large as and more effective in their operations (Table 6.5). However, perhaps the most convincing evidence of the central role of the merchant is found in an account of the credit system. The leader of the London textile trade for many years was James

184

New streams of enterprise

Table 6.4. Average size of investment in British cotton mills [machinery only) c. 1880 1878

c. 1880

Spinning mills (1,159)

Average spindles per mill

24,738

X24S. (£1-2) =£29,685

Weaving mills (765)

Average looms per mill

x

307

£24 = £7,368

Combined mills (597)

Spindles/mill Looms/mill

26,022

469

X24S. (£1-2) =£31,226 x £24 = £11,256 £42,482

Sources: C. H. Lee, 'The Cotton Textile Industry', in Roy Church, ed., The Dynamics of Victorian Business (1980) Table 8.2, p. 173 (for calculations of average spindles and looms per mill). T. Ellison, The Cotton Trade of Great Britain (1886) p. 70 for value of machinery. Many firms rented space and steam power but if they owned both it may be supposed that an average fixed capital investment would be in the order of £35,000 for a spinning mill, £10,000 for a weaving mill and £50,000 for a combined mill. However, the relative weakness of the manufacturer vis-a-vis the merchant lay in shortage of working capital, S. D. Chapman, * Financial Restraints on the Growth of Firms in the Cotton Industry', Econ. Hist. Rev. xxxn (1979).

Table 6.5. Marketing organisation of Rylands and I. & R. Morley compared, i8gj—igoo Morleys 1900 Rylands 1897 Warehouse staff Travellers Customers Annual sales Average annual sales per customer

1,241

77

1,200

70

9,000

20,000

£3-o6m. £333

£3'om. + £150 +

Sources: F. M. Thomas, /. & R. Morley (1900) pp. 22, 76, 85, 100. I. & R. Morley London Sales 1830-1926 (MS, Lord Hollenden). D. A. Farnie, 'John Rylands of Manchester', Bulletin of the John Rylands Library, LVI (1973) pp. 106,

Morrison, who made his fortune at the cheap end of the market, buying at bankrupt prices and keeping costs low and turnover high by selling cheap to country drapers without employing travellers.46 46

R. Gatty, James Morrison, p. 23.

The home trade houses

185

There appears to be no explicit record in the British literature of the mature system, and no relevant business archives, but the biography of a New York merchant who learned his business in England appears to give substance to the sketchy material published on this side. This commission merchant advanced 50 per cent of the fair selling price of the goods to the manufacturer, charging interest at 6 per cent per annum, while commission on sales averaged 5 per cent. He sold to a multitude of small retailers, invoicing at 30, 90 or 120 days. The merchant had no doubt of the advantages of the system to his suppliers, his customers and himself: Altogether, assuming that advances did not run for more than four months, the entire selling cost, including interest and expenses, did not exceed 10 per cent of the selling price, and in many cases was much less. In return, the mill was assured continuity of operation, ample working capital with which to purchase materials and pay its labour, and freedom from credit risk. On the other hand it was a safe and profitable business for the commission merchant, providing he exercised sound judgement and possessed an intimate knowledge of goods and credits.47 Of course, the merchants' suppliers and customers did not always see the system in such a favourable light. Dependent manufacturers spoke of the 'merchant's yoke' and being 'downtrodden', while the connection between the merchant and retailers was compared to the tied house system established by the brewers in the period. Heylin's Buyers and Sellers in the Cotton Trade (1913) maintained t h a t ' It has not been uncommon for spinners to find that cloth agents or merchants, in addition to holding unsold stock of manufacturers, have had a lien on the manufacturer's business and practically controlled it. ' 4 8 MERCHANTS' PROBLEMS

During the last two decades of the nineteenth century serious problems appeared in the system. Growing international and domestic competition arrested the dramatic growth of earlier years and put pressure on profit margins.49 Intense competition induced merchant houses to offer longer credits and put more and more travellers on the road. 50 This 'reckless' policy brought many new 47 48 49

W . H . Hillyer, James Talcott, Merchant, and His Times (New York 1937) p p . 9 2 - 3 . H . B. Heylin, Buyers and Sellers in the Cotton Trade (1913) p p . 122-3, I 2 &- M a r k s & Spencer's archives, Sacher typescript history of the company. Guildhall Lib., Stock Exchange c o m p a n y files, especially those for Fore St W a r e h o u s e Co. (former Morrison, Dillon & Co.), Foster, Porter & Co., a n d Pawson & Co. I. & R . Morley 50 sales data, loc. cit. A. P. Shaw, Ambassadors of Commerce (1885) p. 106.

186

New streams of enterprise Table 6.6. Capital of some leading London retailers, 1895-6 Shares John Barker & Co. Thos. Wallis & Co. Harrods D. H. Evans & Co. Liberty & Co.

0-28 0-30 0-28 O'2O 0*20

Debentures Total (£m.) 0-15

o*43

0*12 o-io

0-42

o#o6 —

0*27 0'20

0-38

Source: The Statist xxxvn (1896-1), p. 332.

and old firms to grief in the 1880s, while some of the most eminent houses (like Morrisons and Leafs) struggled for survival. Several second and third generation leaders found it necessary to incorporate their family businesses, but limited liability was still widely distrusted in the City and dynasties were thought inherently superior to meritocracy in retaining the loyalty of customers, suppliers and workpeople. As we have seen, the two most successful City textile houses, Cookes and Morleys, remained family enterprises until after World War I. 51 These problems were exacerbated as manufacturers and major retailers began to forge direct links. There had always been connections at the fashion end of the market, but they seem to have multiplied rapidly in the 1870s and 1880s. In the late 1880s the shareholders of Morrisons (now the Fore Street Warehouse Co. Ltd) were told ' Things are much changed now, those great retail houses go to the manufacturers and are larger purchasers than even wholesale houses can be of certain specialities.' Walter Leaf, whose City house specialised in fancy goods, said that the big retailers had already 'seriously damaged' the wholesale trade by 1874. Towards the end of the century the traditional piece goods trade with the drapers declined in favour of the ready-made garment trade, where the great retailers had the advantage of the wholesalers.52 By the mid-1890s the leading London stores were already rivalling most of the wholesalers in capital assets (Table 6.6). The history of Debenhams relates that Frank Debenham, the driving force of the firm from the 1860s to the 1890s, was always 51

52

R. Spencer, The Home Trade of Manchester (1890) p. 45. C. M. Leaf, Walter Leaf p. 112. Fore St Co. annual reports. Fore St Co. report, 1888. C. M. Leaf, Walter Leaf p. 114. H. B. Heylin, Buyers p. 122.

The home trade houses

187

'determined to buy at source' and before 1870 was buying silks at Lyons, St Etienne and other places in France and Italy. When woollen underwear began to be made in hosiery factories, Debenhams bought direct from manufacturers in Leicester and Nottingham, and also ready-made clothes from manufacturers. It is not known how many other West End and provincial drapers followed this lead, but according to Walter Leaf, major retailers were able to go direct to the manufacturer and buy from him on as good terms as any wholesale houses; some of them grew large enough to compete with the wholesale houses in their own line. 53 According to The Statist in 1897: The wholesale drapery trade is now a lean trade, with a tendency to become leaner as the big retail houses deal more and more directly with the manufacturers or their agents; and the little shopkeepers, finding it hard to earn a living at all in competition with the great 'store' shops, want more and more concessions from the warehouses in the way of making up small parcels, such as quarter dozens, one-sixth dozens, and perhaps now and then one-twelfth dozens, until it is hard to distinguish so-called wholesale from retail trade. In these circumstances it is not surprising that some wholesale houses do not feel bound to inquire very closely whether a readymoney customer is or is not in the trade, whilst some large retail houses carry on also a considerable business in supplying smaller shopkeepers.54 Various solutions were found to prolong the lives of the home trade houses. Samuel Morley's success seems to have stemmed from his financial control. ' H e knew how to turn the capital of the firm to the best account, never keeping larger balances than were absolutely needful lying idle, and taking advantage of every favourable change in the money market to gain his discounts', his Victorian biographer wrote. ('Discounts' evidently refers to buying not selling.) The accounts of the public companies show that they were already tightening credit in the 1880s. The clearest comments on this process come from Reuben Spencer of Rylands, writing in 1889. At that time some 40,000 commercial travellers were competing for the business of some 50,000 drapers, who were frequently tempted to overstrain their credit. He urged that a retailer should never allow his liabilities to trade creditors to exceed 2 to 2.5 times his capital, and that he should do a cash business. Spencer's moralising work seems to have been very popular. 5 5 53 54 55

M . Corina, Fine Silks and Oak Counters: Debenhams iyy8-igy8 (1978) pp. 4 4 - 5 , 71, 114. The Statist x x x i x (1897) p . 840. E. H o d d e r , Morley p p . 2 3 - 6 . R . Spencer, Home Trade p p . 5 3 , 7 6 - 7 .

188

New streams of enterprise

The most satisfying way for the manufacturer to break out of the system was to establish his own brand with consumers, which gave him the opportunity to increase his profit margin and establish his own marketing organisation. Before the end of the century several firms were establishing their names with the public, including Horrocks of Preston, Hollins (Viyella shirts), Wolsey (underwear), Cartwright & Warner of Loughborough (hosiery), Lyle & Scott of Hawick (underwear) and so on. Most appear to have opened their own warehouses in London or Manchester, or both.56 However, it would be a mistake to suppose that the trade in branded goods was completely lost to the established wholesale houses. Their catalogues show them advertising a limited number of branded lines, while in press advertisements the branded goods manufacturers were often at pains to stress that they only sold through particular warehouses. Specific evidence is hard to come by, but Hollins' accounts show that in 1914 only one-eighth of its sales were made direct to retail. In other words, manufacturers' brands were not a strong challenge to the established merchants before 1914.57 Several of the great warehousing firms were also manufacturers, though it is not to be assumed that this was always a response to constraints on mercantile enterprise. Rylands, Dents and Morleys for instance, were manufacturers before they were merchants, and always maintained a strong presence at the factory stage of enterprise.58 However, there were other firms that entered manufacturing later, for instance Cookes (at Chatham), Welch, Margetson & Co. (Londonderry shirt factory), and even the small David Evans & Co. who had a silk printing works at Crayford.59 But there were problems of integration, even for I. & R. Morley; according to some reminiscences of the firm: 'It was only on rare occasions that any of the Fletcher Gate [Nottingham] managers met the Wood Street [London] buyers. Samples were sent up to London and stock orders were given... but it was left very largely to the Fletcher Gate managers to decide the quantities to be made in the various lines.' Further problems lay ahead. Another anticipation of major future developments was merchant 56

57 58 59

See women's a n d trade periodicals of the d a y eg. Draper's Record, Woman, Woman's Journal. The Times, 17 J a n . 1906 (Horrocks). Coats Viyella archives, records of W m . Hollins & Co. (unlisted). F. M . T h o m a s , Morley. D . A. Farnie, ' J o h n R y l a n d s ' . Cooke, Sons & Co., Cookes of St Paul's. 130 Tears i8oy-igjy (1957). W e l c h , M a r g e t s o n & Co., Centenary Booklet (1933). Ulster R . O . , Belfast T i 3 4 6 / 1 (A. & S. H e n r y ) . S. D . C h a p m a n , ' D a v i d E v a n s & C o , the last of the O l d L o n d o n Textile P r i n t e r s ' , Textile History xiv (1983).

The home trade houses

189

investment in overseas production, for instance Rylands in the Dacca Twist Co. (India) and Morleys in continental centres of glove making.60 The 'home trade' houses had sought overseas outlets from their earliest years. Todd, Morrison & Co., the pioneers of the system, had travellers on the Continent at the end of the French Wars but were frustrated by the inadequacy of British textile designers. Similarly the energies of George Moore (Copestake, Moore & Co.) led him to open warehouses in Dublin and Paris in 1846.61 But the main development came later, with the concentration on the imperial market. I. & R. Morley, Leafs, Bradbury Greatorex and Welch Margetson opened a string of offices in the white colonies. Reuben Spencer of Rylands wrote that 'It is notorious that the colonial trade is the backbone of the Glasgow home trade houses' and believed that Manchester had been slow to respond to the opportunities beckoning there.62 This shift in policy can be closely chronicled at Morleys because of Samuel Morley's prominent public profile (he was a leading Liberal MP and friend of Gladstone). As late as 1881, Morley was opposing the formation of a London Chamber of Commerce to press for protectionism at home and in the imperial market, but when the Chamber was launched a few months later he became Chairman of the Council.63 At the turn of the century nearly a quarter of Morleys' travellers were employed overseas.64 It would be a mistake to see this search for overseas markets as simply the consequence of saturation of the home market and the nationalism of the age. As a result of the Franco-Prussian War, the City strengthened its position as the international centre of both finance and trade, not least the textile trade. The official biographer of Sir George Williams, the head of Hitchcock, Williams & Co. from 1863 to 1906, explained the commercial consequences of the war to the City: 60

61 62

63

64

Threads [ I . & R . Morley's house m a g a z i n e ] , i (4), Oct. 1925, p . 4. H . B. Heylin, Buyers p . 122. F . M . T h o m a s , Morley p . 70. Heylin maintained that in 1913 there were ' m a n y shipping firms in Manchester, London and Liverpool directly interested in spinning and weaving mills, especially in India', but gave no examples. For Rylands' overseas interest see Guildhall Lib., Kleinwort Information Books No. 184 p. 176. R. Gatty, James Morrison pp. 17-18. S. Smiles, George Moore p. 165. I. & R . M o r l e y sales catalogues. Modern London. The World's Metropolis (c. 1893) p . 179 (Leaf & C o ) . A Short History of Bradbury, Greatorex & Co. (1970). R . Spencer, Home Trade p . 56. S. R. B. Smith, 'British Nationalism, Imperialism, and the City of London, 1880-1900', Ph.D. thesis, London 1985, pp. 35-7. Eighteen of seventy-seven travellers: F . M . T h o m a s , Morley p . 76.

i go

New streams of enterprise

It was largely owing to the sudden cessation... of supplies from the two great Continental countries that Britain held her position for so long as the one great market place of the world. For years Continental competition in the colonies and in America was crushed, while the British retail draper, who in some cases had begun to buy direct from the Continent... was forced to fall back on the home wholesale houses... The trade of the civilised globe passed of necessity through British hands... These were the golden years of English commerce.65 Similar entrepreneurial opportunism is evident in Manchester, where Rylands led an assault on the continental market in the 1870s. The Wholesale Textile Association was formed in London in 1912 to resist the encroachments of the manufacturers and major retail houses.66 It was always a very secretive organisation and not much is known about its activities. Its main offensive activity consisted, it seems, in blacklisting manufacturers who contracted directly with retailers. The leading light for many years was the head of I. & R. Morley, Lord Hollenden. The pressure of the W.T.A. is evident in the advertisements of branded goods manufacturers, in which they insisted that they sold only through the wholesalers; in reality many of them were simultaneously involved in subterfuges to sell direct to the chain stores.67 So late as 1953, the W.T.A. were advertising in the Draper's Record that' The Wholesaler ensures that only the cream of the world's production is presented to the retail trade. He enables the Shopkeeper to examine the products of hundreds of manufacturers under one roof...'68 By such pressures, the old merchant houses were able to resist the tide of change for a couple of generations. It was not until the period of mergers and takeovers of the 1960s that the last of the old firms were incorporated into vertical combines. 65

66 67

68

J . E . H o d d e r Williams, Life of Sir George Williams (1906) p . 257. Guildhall Lib., Kleinwort Information Books, No. 184, p. 176. Rylands made 'a great push in Paris' and also in Rio in the 1870s. J . F . Barclay, The Story of Arthur & Co. Ltd. (Glasgow 1953) p p . 123-4. J o h n M i l l i n g t o n a n d S. D . C h a p m a n , Four Centuries of Machine Knitting (Leicester 1989) P- 34Draper's Record, 21 M a r . 1953, p . 9 5 .

P A R T III

Response to instant communication

CHAPTER 7

Problems of restructuring mercantile enterprise

During the course of the nineteenth century, communications improved at an increasing pace, better roads, river navigation, canals, harbours, docks, and sailing ships being overtaken by the impact of the railways, steamships and the great international ship canals. The consequences were obviously far reaching for trade and merchant organisation, but change could be accommodated within the existing family business. The advent of the telegraph was quite another matter. It represented instant communication worldwide, and its effects were sometimes revolutionary. In principle there was now nothing to prevent direct communication between the manufacturer and his most distant customers, and the traditional chains of middlemen began to look redundant. The opening of the international telegraph lines broadly coincided with the intensification of competition in overseas markets from a rapidly industrialising Germany and the United States, and consequent pressure on mercantile profit margins. The last quarter of the nineteenth century was therefore a period in which British merchants were forced to rethink their strategies and to conduct very different kinds of business to those undertaken by their forebears in trade, or to withdraw into other activities. THE TEXTILE TRADE

Though the telegraph is familiar enough to historians, its economic implications have never been fully explored, and there is no major study to fall back on to measure its impact. The full implications are evidently too large to embrace in this book, but it will be helpful to identify some direct consequences of instant communication for merchant enterprise. The notion of direct communication between exporting manu-

194

Response to instant communication

facturer and local wholesaler or retailer is not a fanciful idea prompted by retrospective insight. The main barrier would be the exporter's need to understand the market in which his customers were operating, but where he was selling standard commodities to North America or the 'white colonies' there was not too much problem about this, particularly in the 1860s and 1870s when competition was less severe than it became later. Indeed, the most successful entrepreneur in the transatlantic trade in the middle decades of the century, Alexander Turner Stewart, built up an organisation that linked factories and an export warehouse in Britain with a vast US importing organisation, retail emporium in New York and a mail order business. Sharp, Stewart & Co. employed over 2,000 in the Manchester warehouse alone, and there was also a cotton mill in the area, a linen factory in Belfast and a hosiery and lace factory in Nottingham. The buying organisation had offices in every important textile and clothing centre in Britain and on the Continent, and agents as far away as India. In 1864 it was reported that the wholesale and retail organisation in Broadway was 'probably the most extensive and perfect in the US, every article accepted to the D.G. [dry goods] trade may be found here', and within the decade 2,200 people were employed there with others in New York clothing factories. Capital rose rapidly from $io*om. (^2'om.) to $5O-om. (£io*om.) in the decade 1862-71, far outpacing anything previously seen on either side of the Atlantic.1 Stewart can fairly be regarded as the pioneer of vertically integrated and international trading organisations that have dominated the twentieth-century marketing scene, but in the nineteenth century his vast organisation had few authentic successors and it declined rapidly after his demise. The failure to follow his lead had more to do with the preconceptions of entrepreneurs in Britain and America then any physical restraints. In Britain vertical combines and transatlantic combines were long inhibited by the highly fragmented structure of the textile industries. In America the entrepreneurs who made great fortunes in dry goods at this period (for instance John & James Stuart & Co., J. Seligman & Co. and Geo. Bliss & Co.2) evidently preferred to shift to pure finance, where more money could be made with less effort. 1

2

H. E. Resseguie, 'Alexander Turner Stewart and the Development of the Department Sotre 1823-76', Bus. Hist. Rev. xxxix (1965). W. F. M. Weston-Webb, Autobiography of a British Tarn Merchant (1929) pp. 60-76. S. D. Chapman, The Rise of Merchant Banking (1984) pp. 52-3.

Problems of restructuring mercantile enterprise

195

If it was not possible to dispense with the merchant entirely, certainly the chains of middlemen characteristic of earlier generations of mercantile enterprise were no longer necessary. Taking the best-known case to illustrate the point, the movement of raw cotton from America to Europe, the chain included merchants or agents in the southern ports (Charleston, Savannah, New Orleans etc.), shippers, merchants at the British ports, cotton brokers in Liverpool and cotton dealers in Manchester, Blackburn and other centres, and buying brokers who represented the spinning mills.3 In buying as in selling, large transatlantic trading and manufacturing organisations emerged in the 1860s and 1870s on the foundations of family businesses established in earlier years. The best known was De Jersey & Co, of Manchester, who were the British arm of Ludwig Knoop & Co., a German merchant with extensive mill interests in Russia. More will be said about this colossus in the next chapter, but for the present it is worth noting that in 1875 it was thought to be the largest cotton buyer in the world with branches in all the cotton markets in Europe and America. Julius Knoop began his New York career as a pedlar and sent his son for apprenticeship with De Jerseys. By 1882 the firm was thought to be worth over £i*om., completely outclassing anything previously seen in the importexport trade in cotton.4 But in the 1880s profit margins in the cotton trade became so tight that it was almost impossible to build up a large integrated business from retained profits. The pressure on margins can best be illustrated from the experience of Baring Bros.' Liverpool branch which was largely (but not exclusively) engaged in cotton trade finance. The returns over four decades were as follows: turnover 1850-9 I860-9 1870-9 1880-9

Il

m

£ '75 £22-35111. £5O-72

£94-64

commissions £164,000 £238,000 £218,000 £80,545

7o

retl

i*4 I*I

0-4 O*I

In 1890 the branch reported to London that since 1878 a very large proportion of the turnover had borne no commission at all, though 3 4

M. M. Edwards, Growth of British Cotton Trade (Manchester 1967) Ch. 6. Dun, Charleston, 1 p. 393. S Thompstone, 'Ludwig Knoop', Textile History xv (1984).

196

Response to instant communication

it necessitated ' a responsible and expensive staff'. Meanwhile the old import merchants' consignment and shipping business had all but disappeared. An even more graphic view of the changes in the Liverpool cotton trade appears in the autobiography of Samuel Smith MP, My Life Work (1902). He was the founder, in 1864, of Smith, Edwards & Co., Liverpool cotton brokers, and also a partner in James Finlay & Co. of Glasgow in the Indian trade. At the turn of the century Smith, Edwards & Co. with a capital of £500,000 was much the largest of the Liverpool cotton brokers (Table 7.1). As Smith recalled: The principal business then was selling for [import] merchants, and buying for Lancashire spinners, and many fine businesses had sprung up with the growth of Lancashire trade, where commissions were large and regular, and where the brokers incurred little or no risk. Speculation in those days was trifling compared with what it is now. Nearly all the business was bonafide transfers of cotton in warehouse, and it was quite an exception to sell a cargo afloat. A rigid distinction was drawn between merchants and brokers, and any attempt to combine the two would have caused expulsion from the Cotton Brokers' Association. All the old landmarks of those days have been swept away. The great mass of business done has long been in contracts for future delivery. Speculation has enormously increased. The distinction between merchants and brokers has virtually disappeared. I have seen change after change pass over the scene, till old men can scarcely identify the highly-complex system of to-day with the steady routine of the 'fifties. At each stage strong opposition was offered to the speculative and ' demoralizing changes' as they were then styled... but it was useless to fight against them. The oldfirmswho refused to move with the times were nearly all swept away or died of inanition, and few of the leading houses of half a century ago are now in existence. The great originator of this change was the United States of America. It was there that these novel methods of business were hatched, and their gigantic combinations soon forced other countries to adopt their tactics or be exposed to crushing losses. For many years our cotton and corn trades have been, I might almost say, puppets in the hands of American players, and unless our commercial men took full account of this they were soon stranded. The allegations about American entrepreneurs as the puppet masters is not, however, entirely borne out by more contemporary evidence. According to Baring Bros.' Liverpool house, reporting to London head office in 1883, 'the business is conducted mainly by English houses' and ' there are now few prominent American cotton shipping houses and it is no longer possible to obtain consignments from

Problems of restructuring mercantile enterprise

197

Table 7.1. Capital of some major US and UK cotton merchants in the early twentieth century Major US houses

McFadden, Philadelphia Sprunt, Wilmington (N.C.) Weld, Montgomery (Alabama)

Anderson Clayton, Houston (Texas)

overseas partners or branches Bremen (1881) Liverpool (1881) Le Havre (late 1870s) Bremen (1906) Liverpool (1905) Liverpool Boston Bremen New York Liverpool

capital (£) 75,000 (1904) 250,000 (1905) 300,000 (1907) 1,000,000 (1899) 250,000 (1907) 200,000 (1914)

Major UK houses

Smith, Edwards & Co., Liverpool Muir, Duckworth & Co., Liverpool Alexander Eccles, Liverpool Dennistoun, Cross & Co., Liverpool A. Stern & Co., Liverpool Williams, Wilson & Co., Liverpool W. H. Midwood & Co., Liverpool J. Taylor & Sons, Liverpool

Calcutta Alexandria Savannah (Ga.) — New York St Louis, Dallas, Oklahoma City Fort Worth San Antonio Oklahoma City Augusta (Ga.) —

500,000 (1904) 200,000 (1906) 250,000 (1906) 200,000 (1904) 200,000 (1908) 100,000 (1908) 210,00 (1911) 100,000 — 150,000 (1911)

Sources: Guildhall Lib. Kleinwort Information Books; Baring Bros. Liverpool correspondence XLV ; John Killick, ' Cotton Marketing in the late Nineteenth Century: Alexander Sprunt & Son 1884-1956', Bus. Hist. Rev. LV (1981).

them'. 5 Twenty years or so later, the pacemaking US houses were not significantly larger in terms of capital, than the Liverpool leaders (Table 7.1). The substantial truth in Smith's remarks is that New York forced the pace of change after 1870 when the cotton market there was organised exclusively for futures trading (i.e. contracts were agreed for delivery of standard quantities and qualities of baled cotton at dates up to a year ahead), as distinct from the traditional commodity (or 'spot') trading. The relaying of the Atlantic cable in 1872 5

Baring Bros. Liverpool MSS, HC3.35 esp. xxxvn, W. F. Gair report 27 Dec. 1890, xxx letter of 4 Aug. 1883. Samuel Smith, My Life Work (1902) p. 17.

198

Response to instant communication

extended the commercial influence of New York to Europe, but Liverpool responded by developing its own futures market to function alongside the spot market. Nevertheless, New York continued to be the more speculative centre; the decline of Welds from £ r o m . to £0*25111, in the early years of the century (Table 7.1) offers a striking illustration of the vulnerability of the richest firms. British firms pretended to keep aloof from such speculative habits and were closely monitored by their merchant bankers, but transatlantic partnerships and agencies sometimes brought down the most staid concerns. Turnover of Liverpool houses was, as Smith remarked, very high in the period. Of 202 firms who were members of the Liverpool Cotton Brokers Association in 1885, less than half were in business twenty years later, but new firms were formed so that there were 220 in the 1905 Directory. The American pacemakers confronted the established Liverpool system by bypassing the traditional buying agencies in the old plantation states and the selling agencies in Europe. McFaddens started this restructuring by opening branches in Le Havre in the late 1870s and in Liverpool and Bremen in the 1880s. Welds and Sprunts were not far behind. However, it was not until the interwar period that another American enterprise, Anderson Clayton, came to dominate the transatlantic distribution of cotton ;6 Liverpool mounted a determined rearguard action and under the leadership of men like Smith showed resilience until World War I. The undermining and demoralisation of the Liverpool import merchants and cotton brokers would seem to have offered an opportunity for spinners to forge direct links with New York for importing raw cotton, and weavers and printers for exporting. Nicholas's model of the development of British multinationals envisages the merchant function being usurped as manufacturers gradually familiarised themselves with overseas markets, or as a result of some crisis (rupture) of relations between manufacturer and overseas agent. But the cotton industry was a highly disintegrated structure and the reality was much more complex than this, as H. B. Heylin's Buyers and Sellers in the Cotton Trade (1913) explains. T o

simplify his commentary we may represent six characteristic 6

D. A. Farnie, The English Cotton Trade and the World Market i8ij-g6 (Oxford 1979) p. 60. A. H. Garside, Cotton goes to Market (New York 1935) Chs. 9, 10. J. R. Killick, 'The Transformation of Cotton Marketing in the late Nineteenth Century', Bus. Hist. Rev. LV (1981).

Problems of restructuring mercantile enterprise

199

developments in each of which there is cause (in italics) and possible response (after the colon), so suggesting an alternative model for this industry. (1) Increase in size of the representative producer: manufacturers held stocks until a period of better selling prices. (2) Growth in scale of retailing: manufacturers went straight to retailers for better profit margins. (3) Growth in mass media advertising (newspapers, billboards, etc.): manufacturers appealed direct to consumers by branding and advertising. (4) Growth in ready-to-wear clothing and decline of traditional drapers* piece goods trade: manufacturers sold direct to clothing factories or (in a very few instances) launched their own. (5) The 'great depression' (i8yj-g6) in prices and profit margins tightens margins allowed by merchants while orders become more erratic: manufacturers sought more regular trade, even if it meant higher selling costs. (6) Many shipping firms in Manchester, London and Liverpool diversify their investments by taking direct or indirect interests in spinning and weaving mills (especially in India) while several home trade houses built factories in the provinces: manufacturers tried to achieve the consistently good dividends declared by the large merchanting houses by adopting similar vertical integration policies. Parallel tendencies have been discerned in the metal industries, except in this case the growth of consumer durables must be substituted for ready-to-wear clothing. By the 1870s the conventional wisdom of three generations of manufacturers was against the high risks of marketing overseas; they were pushed towards it only by an accumulation of circumstances they could not control. Heylin's analysis suggests that most of the opportunities to respond to change lay with the manufacturers but the reality is that few of them grasped it, and when they did, it was because (as Heylin conceded) it was 'the outcome of being driven to desperation'.7 7

Six stages based on H. B. Heylin, Buyers and Sellers in the Cotton Trade (1913) pp. 122-3. Cf. G. C. Allen, Industrial Development of Birmingham and the Black Country (1929) Pt iv, Ch. 5.

200

Response to instant communication

The point may be illustrated from the experience of Tootal Broadhurst Lee, who in the 1880s were Lancashire's third largest firm after Rylands and Horrockses. Following incorporation in 1888 the firm reviewed its overseas marketing organisation, which had hitherto consisted of appointing exclusive agents round the world, paying them 10 or 15 per cent commission on sales. It was reported from New York that in the years 1881-7 direct sales to a dozen retailers had risen from under 10 per cent to 63 per cent, with a corresponding fall in sales through merchants, jobbers and wholesalers. American producers were supplying more and more of the home market but there was scope for more sales in better and finer goods. Consequently it was decided to open a New York office, which was soon paying its way. However, the decision to make this change was only reached because it was argued that 'our present trade with the importers and jobbers has now fallen to such a figure ... that we run little risk of losing anything by the proposed change', and the system of agents was retained in other markets, including the Continent, Latin America and the Far East. Meanwhile Rylands took a strong initiative in Rio de Janeiro but this does not appear to have succeeded for long or invited replication in other overseas markets, for later we are told that the firm's exporting was done through Manchester merchants with good foreign connections or through foreign merchants.8 Reluctance to change the established marketing system by competing with merchants can be further illustrated from the experience of Horrocks, the Preston cotton manufacturers who had a capital of £2*0111. at the turn of the century and were shown in Chapter 3 to have taken an early lead as exporters. In 1903 a Barings' report on them noted: Large concerns like Horrocks lost so much in South America in years gone by that they now employ a London intermediary who pays them at once for their goods and runs this risk with their buyers. This must be a very expensive way of working and there must be many concerns who cannot afford, or who would wish to dispense with the intermediary.9 In other words, the Latin American market for textiles was still controlled by merchants, and the same was said to be true of 8

Manchester P.L., Tootal Broadhurst Lee records, board minutes 1 (1888-93), general management committee minutes 1 (1888-9) es P- P- 73- D. A. Farnie, 'John Rylands of Manchester', Bull, of the John Rylands Lib. LVI (1973). Kleinwort Information Books, UK 9 1 p. 76. Baring Bros. Liverpool letters HC3.35, XLVII, 23 Jan. 1903.

Problems of restructuring mercantile enterprise Birmingham and Black Country products. 10 The North American and colonial markets were of course much closer to the domestic one, and inasmuch as they continued to be supplied by British merchants (rather than by manufacturers or American merchants), it was often by shipping houses and home trade houses that had integrated back to mill production and forward to Empire and American outlets. The scale of the biggest of these concerns like Cookes, Rylands, A. & S. Henry and I. & R. Morley also shows a big leap forward in size and complexity of the organisation (Table 6.3). The other large Lancashire organisation that considered overseas merchanting was the Calico Printers' Association, a 'lumbering leviathan' formed in 1899 out of seventy-three firms. The C.P.A. had 'branches' (factories) specialising in production for particular markets such as India and Ceylon, the Levant (Middle East), 'Persia and Bagdad', East and West Africa, Rangoon, and China and Japan, and from time to time senior representatives were sent out to report on the situation, but it seems that the existing system of overseas agents (commission merchants) was not seriously questioned until the mid-1930s. Stiff competition on the Continent was attributed to Steiner of Church Works, near Accrington, 'doing a direct trade', but no attempt was recorded to respond in like manner. 11 Another consequence of instant communication was that it became much less necessary for merchants and producers to hold large stocks. Once again, the only good data is for cotton, but as it was the foremost commodity of British trade it will serve to illustrate stockholding well. At the close of the French Wars stocks were as high as half the annual UK import, but by mid-century this had fallen to a third and in the early 1880s to under a fifth.12 A major contraction, that is to say, had taken place before the opening of the transatlantic cable, but instant communication reduced the percentage further while the appearance of the 'futures' market served to stabilise prices. However, the effects on the cotton trade were less dramatic than on some other world trading commodities, partly because the system of trading developed before the age of telegraph, was highly competitive, and also because the American Civil War 10 11

12

G. C. Allen, Industrial Development, Ch. 5. Manchester P.L., C.P.A. board minutes 1899-1912. Simon Pitt, 'Strategic Change in the C.P.A.', Ph.D. thesis, London 1990, Chs. 2-4. T. Ellison, The Cotton Trade ofG.B. (1886) Table 1.

201

202

Response to instant communication

caused major dislocation of the leading suppliers for some years and consequently delayed further change. Indeed, the system of US agents, importing merchants and mill buying brokers was still prominent in Liverpool and Manchester when Alston Hill Garside wrote his definitive Cotton goes to Market in 1935. However, by this time the bulk of the American cotton taken by Liverpool was handled by about a dozen merchants, and some of the largest spinning companies in Lancashire bought direct from the importing merchants through their own buying rooms in Liverpool while others bought direct from exporters in the United States through agents in the main British ports.13 THE GRAIN TRADE

The commodities which saw more novel forms of enterprise and dynamic growth were those which were relatively new to international trade (like crude oil and rubber) or those in which trade was rapidly expanded, most notably grains, and foodstuffs like tea, meat and sugar. Of these, grainstuffs were much the most important within the period and are the best documented, so will form a main focus in this chapter. The three-fold increase in British imports of grain, and the multiplication of exporting countries is shown in Table 7.2. Russia, which was the principal supplier in the middle decades of the century, was rapidly overtaken by the USA and equalled by India, with Argentina (including Uruguay) and Canada close behind, while Western Europe lost its significance as an exporter. Taken together, the multiplication of sources, increase in trade, and constant fall in freight rates created a situation in which trade in any single commodity was highly complex, competitive and fast moving. It offered opportunities to the international specialist with rapid lines of communication who could quickly outmanoeuvre the general merchant. In the 1880s it was still possible for merchants to handle two or three complimentary commodities (like, say, wheat and cotton, where the main exporters were the USA and India) but this became less and less usual as major international operators took over. So early as 1882 a London corn broker, William Harris, declared to a government commission that 'The man who used to be the 13

A. H. Garside, Cotton goes to Market pp. 116-7.

Problems of restructuring mercantile enterprise

203

Table 7.2. Quantity of wheat and wheaten flour imported into the UK 18J2 and 1903 (m. qrs.) Country of origin USA Russia India Argentina and Uruguay Canada Roumania and Balkans Austria—Hungary Western Europe all other countries total imports total cost of freight

1872

per cent

1903

per cent

2"O

21-3

I I*O

39'5

4-2

447 o-o

4-0 4-0

0*0

O'O

0-4

o-o o-o

4'3 o-o o-o

3-6 3*4 o-8

14-4 14-4 12-9

0-3

I-I

2'0

21-3

°*5 O-2

i-8 0-7

ioo-o

27-8

ioo-o

o-o

o-8 9'4 £3-o 4 m.

12*2 2-9

£3-20111.

Source: The Corn Trade Tear Book (Liverpool 1904) p. 141.

middleman [i.e. the merchant] is hardly known now; he gets no living out of it... I have seen firms of merchants for years in the City who have confined their business to the wheat trade, but I have never seen them do any good at it.' By this time, he explained, brokers ('commission-men') were making the most profitable business. The London broker dealt direct with a broker in New York or Chicago on orders from millers or dealers in various parts of Britain, instructions being telegraphed through. Brokers' commissions on cargoes of wheat tumbled from 3 per cent to as low as 0.5 per cent. Wheat prices in Chicago and Liverpool converged until the difference seemed scarcely significant; in the mid-1880s the price differential was 85 cents a bushel (i7§d.) but in the years 1910-13 it was only nine cents (2d.) Clearly gross bulk dealing was necessary to show any profit.14 Before the Crimean War (1851-5) the major part of British grain imports had come from Russia, either via the Baltic or the Black Sea. In the north the trade was led by a mixed bag of old Muscovy trading families (Egerton Hubbard & Co., Hills & Whishaw and others), Anglo-German families (Brandts in London and Blessig, 14

Royal Cmn on Agriculture, Parl. Papers, xiv pp. 345-6, ev. of W. J. Harris. C. K. Harley, 'Transportation and the World Wheat Trade 1850-1913', Explorations in Economic History XVII (1980).

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Response to instant communication

Table 7.3. Leading importers of grain into Britain from St Petersburg, 1878-80

E. H. Brandt & Co. Egerton Hubbard & Co. Blessig Braun & Co. Hills & Whishaw Neuhaus & Sieskind 34 other merchants

quantity

per cent

4'375 1-417 1-287 1-150 1-126 11-728

20-75 6-72 6-i 1 5'45 4-41 51-22

21-083

ioo-oo

Source: Nottingham Univ. Dept. of Manuscripts and Special Collections, Brandt MSS, circulars of C. Prevost, grain broker. The quantity cited is for the three years 1878, 1879 and 1880. The quantities given are in millions of chetverts, except for rye which is in kools.

Braun & Co. in Liverpool) and Greeks (notably Scaramangas, the successors to Rallis) (Table 7.3). In the south the trade was dominated by Rallis, Rodocanachis and other Greek families described in Chapter 5, until Odessa ceased to be a free port in 1857. The two leading Greek houses shifted their interest to India and the Russian grain trade was taken over by Jews led by Leopold LouisDreyfus.15 The Russian grain embargo during the Crimean War stimulated a search for alternative sources, and the USA, India and Argentina became major suppliers. Consequently the period from the 1860s to the end of the century saw a struggle between a dozen or so major international firms. In England, the development of America as a major grain exporter stimulated Liverpool to challenge London's traditional leadership in the grain trade. Liverpool was the home port of leading grain merchants like Ross T. Smyth (a partnership between a Londonderry factor and one of the Rathbone family) Sanday & Co. and Balfour, Williamson & Co. Meanwhile in London Rallis developed the import of grain from India. All these firms faced the challenges indicated in Harris's description of the trade, as well as formidable competition from continental competitors.16 15 16

P. Herlihy, Odessa. A History iyg^-igij. (1986) p. 213. G. J. S. Broomhall and J. H. Hubback, Corn Trade Memories (Liverpool 1930) pp. 59ff. Baring Bros. Liverpool letters HC3.35 esp. xxxvm (1891), XLV (1899), XLVII (1903).

Problems of restructuring mercantile enterprise

205

T a b l e 7.4. Some major grain merchants of the world in the early twentieth century

Merchant house

Place and date established

1. Dreyfus

Basle 1852

2. Bunge & Born 3. Ralli Bros. 4. Balfour Williamson

Amsterdam 1818 Antwerp 1850 London 1818 Liverpool 1851

5. Ross T. Smyth

Liverpool 1839

6. S. Sanday & Go.

Liverpool 1880

7. Blessig, Braun & Co.

St Petersburg 1793 Liverpool c. 1830? London 1838 Russia Archangel 1802 Russia London 1805

8. Rodocanachi 9. E. H. Brandt

Sector(s)

Capital (£m.)

Russia, Balkans, Argentina USA, Argentina Russia, India California, Argentina USA, Balkans, India etc. India, USA, Argentina etc. Russia

o-6-i-o (1903) i-88 (1902) r6-2 # o (1910) 3-0 (1902) 0-4 (c. 1890) i-o (1909) 0*3 ( + 0-2) (1907-12) 0-2-0-35 (1906-15) 0-4 (1902) 0-4 (1911) 075 (1904)

Sources: nos. 1-5, 8-9, see Appendix to Ch. 10. No. 6: Kleinwort, Sons & Co. Information Books, Goldman Sachs 1 p. 135, 11 p. 191. No. 7: Baring Bros. Character Book LIV 6.2.4.

The outcome, so far as estimates of size and success by partnership capital can measure it, is set out in Table 7.4. Ralli Bros, look the biggest firm but in fact they had interests in a range of other commodities (particularly jute, hessian sacks and rice) imported from India so their relative importance in grain may be exaggerated. According to Ralli Bros.' Calcutta Handbook (1888), 'we feel the advantage of our position is in contracting for very distant deliveries when naturally all sellers come to us in preference'; in other words the firm used its unrivalled capital to dominate the forward contract business and from London sold direct to millers.17 As mentioned in Chapter 5, Rallis conducted their whole business on the basis of cash trading. The firm 'never issues "paper" [bills of exchange] but does a cash business to the extent of its available means, and its means are great', a spokesman boasted in 1902. By 1886 India could produce wheat cheaper than any other country in the world, and low cost 17

Cambridge South Asian Archive, Ralli Bros., Calcutta Handbook 11 (1888) p. 55.

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Response to instant communication

plus cash dealing made Rallis the most powerful force in the world grain trade at the turn of the century.18 Bunge & Born were probably the most successful continental firm; they were a German partnership who operated mainly in Argentina after 1876. According to the historians of the organisation, 'the new enterprise was fostered by the absence of English enterprises interested in operating in this market'. To secure its position the firm opened collection centres in the interior and built grain elevators and silos at the ports, but its most important single advantage may have been the Bunges' close connections with the Antwerp and French Protestant banks. This backing also enabled it to develop interests in the Congo, Indonesia and Malaya, deliberately diversifying into rubber and colonial produce, which in the early years of the century lifted capital dramatically from £300,000 to the huge sum given in the estimate.19 Rather less is known about Louis Dreyfus & Co. but there appear to be a number of interesting parallels with Bunge & Born. Dreyfus originally based his activities in the south of Russia and opened branches in all the Black Sea and Azov ports, competing with German rivals Neufeld & Co. At the turn of the century it was reported that they had 'hundreds of branch offices all over Russia'. Their domination in the Ukraine reminds us of Bunge's ubiquitous operations in South America which earned it the sinister nickname of 'the Octopus'. Later in the century the attractiveness of the Russian grain trade declined, partly because it became easier for new Russian inland dealers to forge their own connections with markets in Western Europe. Dreyfus then moved into the Balkans, supported by his small fleet of steamers, and became a close friend of King Carol I of Roumania, exporting the best and highest yielding grain in Europe. Meanwhile Edouard Bunge became broker to King Leopold II of Belgium and a royal business associate, connections reminiscent of the tradition of the Court Jews. Dreyfus's Jewish connection was probably helpful in obtaining financial support from continental bankers; at any rate the correspondence of the Buenos Aires branch of the London & River Plate Bank indicates 18

J. Gennadius, S. A. Ralli (1902) p. 24. Royal Cmn on Depression in Trade, Parl. Papers, 1886, XXII p. 82.

19

R. Green and C. Laurent, Bunge & Born. Puissance et secret dans Uagro-alimentaire (Paris 1984) esp. pp. 23, 43, 52. Kleinwort Information Books, France, Belgium & Holland 11 p. 104. Dun, New York, vol. 341 pp. 148, 200R. Dan Morgan, Merchants of Grain (New York 1979) Ch. 4.

Problems of restructuring mercantile enterprise

207

the firm were not short of credit. 'These people draw very largely on Europe... We quite agree... that care is necessary in dealing with people of this [Jewish] class...' Despite the anti-semi tic note, a $300,000 overdraft was agreed, which was no doubt one means by which Dreyfus broke into the Argentinian trade on a large scale and were soon challenging Bunge & Born, who were also being supported by the British bank.20 The developments in Russia just outlined help to explain the position of British merchants there. The changes took place in the north a couple of decades after those in the south so that the northern leaders listed in Table 7.3 reflect the old system rather than new leadership. Bank capital was focused more strongly on the south because the export of grain was developing more rapidly there and the shorter distances to Odessa and more rapid turnover suggested better profits. Nevertheless there are clear signs of decline of the old order. Brandts and their Liverpool friends Blessig Braun & Co. had been diversifying out of Russian trade for some years, Brandts towards merchant banking and Blessigs towards being a Russian investment group with interests in shipping and textile factories. Egerton Hubbard & Co. tried to ride both horses at once, but with very limited success. Brandts tried to mount an operation financing Argentinian grain movements but at the turn of the century the commission business of its chief representative in Buenos Aires ' almost ceased to show any profits owing to the competition from the big international grain dealers' and it was finally abandoned. In Odessa, Rodocanachis survived as a small investment group, perhaps because of the family's merchant banking activities in London, but Scaramangas disappeared.21 The three Liverpool houses that replaced the old order (Smyth, Sanday, and Balfour Williamson) were moderately successful but scarcely world leaders. Balfour Williamson occupied the premier position in California after Isaac Friedlander, the German Jewish immigrant who became the 'Grain King', went bankrupt in 1877. Smyth looks a rather smaller operation but the senior partner 20

D a n Morgan, Merchants

p p . 34, 37. Kleinwort

Information

Books U K 11 p . 97.

V. A. Zolotov, Khlebnyy Eksport Rosii Cherez Forty Chernogo {Russia's Grain Exports through the

21

Black Sea and Azov Ports) (1860-go) (Rostov 1966) p. 239. University College London, BoLSA MSS D35/14 esp. pp. 503, 567 (4 Apr. and 16 May 1902). L. Jurowsky, Der Russische Getreideexport (Munich 1910) pp. 83-8. C. Amburger, William Brandt and the Story of his Enterprises pp. 6 2 - 3 . See also below, Ch. 8.

208

Response to instant communication

(H. L. Smyth) was also Chairman of the Liverpool North Shore IVJill Co. which had a capital of £210,000 (1897) and was claimed to be 'the largest and most perfect mill in the kingdom'. He was also a director of the Bank of Liverpool and two major insurance companies. The strategy of Smyths and their principal local rivals, Samuel Sanday & Co., was to open branches or agencies in all the main production centres of the world, including the Balkans, India, the USA and Argentina. The last seems to have been the most difficult source for them due to lack of outward cargoes except coal and convenient alternative inward cargoes if local crops failed. In most of these centres they did not need to invest in the transport and storage facilities with which Bunges and Dreyfus tried to entrench their position in Argentina.22 What conclusions can be drawn about British mercantile enterprise from this short survey of the leading international players? The grain trade was evidently a high-risk one requiring iron nerves, with high bankruptcy rates. As the trade became globalised there were few old British firms (in the sense of hereditary British) in it; it was largely left to immigrant Germans and Greeks, then to the Atlantic frontiersmen of Liverpool. The strategies of the remaining firms were to concentrate on the relatively safe ground of India, the USA and Canada, or to diversify by opening branches in several centres. It looks as if they avoided Argentina, and it may be that there were sound reasons for doing so. The infamous Baring crisis of 1890, which shook Argentinian credit through the decade, was another reason for wariness. The British approach was not necessarily less sensible or enterprising than that of Bunge and Dreyfus, and certainly the London banks were not so impressed by the continental houses; it was reported in 1910 that Bunge had lost 3m. Belgian francs on grain while Dreyfus's sons were brash and speculative.23 However, there remains a suspicion that continental banking practices may have been more supportive to bold enterprise than the British ones, particularly for firms with good establishment connections. The US Federal Trade Commission reported in 1920—6 that Dreyfus and Bunge were making their substantial profits mainly with borrowed money.24 The surviving records do not allow this 22

23 24

G. J . S. Broomhall a n d J . H . H u b b a c k , Corn Trade Memories p p . 2 4 4 - 7 , I 7 2 ~ ^ 5 , 156-9. R. Paul, ' T h e W h e a t T r a d e between California a n d the U . K . 1854-1900'. Mississippi Valley His. Rev. LXV (1958). Kleinwort Information Books, France 11 pp. 8, 104, m p. 114. D a n M o r g a n , Merchants p . 7 3 .

Problems of restructuring mercantile enterprise question to be investigated any further for the grain trade, but it prompts the wider issue of whether financial support was adequate to meet the rapidly changing needs of British commerce. This is a matter that must be given further attention, drawing evidence from the wider range of firms and trade sectors. But first it is necessary to focus on some more innovative branches of trade to examine the British record, and hence to finalise the verdict on grain.

SOME INNOVATIVE TRADES

The two sectors of trade so far surveyed present a rather different story. In textiles, the merchants managed to hold off any significant invasion of their territory by manufacturers. In the Far East and South Africa, the same merchant houses, as we saw in Chapter 5, also advanced into other branches of trade such as tea, jute, diamonds and rubber. In the grain trade, however, withdrawal was more in evidence than advance. Would it be fair to conclude that British mercantile houses were averse to the more high-risk, innovative areas of trade? To answer this question we need to examine the record in some new trade developments of the late nineteenth century. It is not difficult to discover some striking British initiatives in new commodities. Marcus Samuel and Bowrings in oil, Harrison Crosfields and Heilbut Symons in rubber, Vesteys and Borthwicks in meat, and Fyffes in bananas come easily to mind. Less well-known names include Chalmers Guthrie in coffee, Thomas Drysdale & Co. in hardware and Wallaces in tea.25 On the crude measure of size of capital around the turn of the century, the record of these firms seems no less impressive than the best-known names in more traditional areas, including foreign competitors like Bunge and Dreyfus (Table 7.5). The commodities in which they dealt were traded internationally from worldwide sources in much the same way, and with comparable risks, to grain. The conservative houses were those that declined to change their traditional ways of trading and can be seen declining. Thus the capital of the Rathbone dynasty fell from £600,000 (1871) to little more than £50,000 (1903-4), while Dennistouns declined from £770,000 (1857) to £200,000 (1903-4). Numerous other houses slipped into bankruptcy, including 25

Bibliography of major firms appended to Ch. 8.

209

Response to instant communication Table 7.5. Some major merchants in new commodities c. igio-14 capital (j£m.)

sources

1910

i-8 1-25

BofE

!9O3

075

dates

Hennques p. 198

Marcus Samuel, London (oil) Heilbut, Symons & Co., Liverpool (rubber) Chalmers Guthrie, London (coffee) Bowring & Co., London (oil)

1897

1912

0-91

KS-GS 11 p. 188

Vestey Bros., London and Liverpool (meat) Thos. Drysdale & Co., Buenos Aires (hardware etc.) C. Czarnikow & Co., London (sugar) Harrisons & Crosfield, London (rubber) Wallace Bros., London (teak)

1914

2*0

BB-CRD 3/3

1906-8

I'O I

KS-R.Plate, p. 95

KS-UK 11 p. 47, m p. 121

1911

nearly

BB-CRD 3/3

I'O

1910

O'45l

1911

o-8 J

Appendix to Chapter 8

Sources: R. Henriques, Marcus Samuel (i960), p. 198. KS Kleinwort, Sons & Co. Information Books. The main series used here are those for the UK (3 vols.) and the reports to Goldman Sachs (GS), 2 vols., 1899-1926. At Guildhall Library, London EC. BB Baring Bros. 'Character Books'. At the Bank, London EC. B of E Bank of England Discount office records. At the Bank, London EC.

some prestigious names like Bensons of Liverpool (see Chapter 3), who lost most of their £200,000 capital in 1875.26 It is not possible to document all the firms that disappeared by this route but official statistics show merchant bankruptcy rates increasing after 1875.27 The development of shipping services provided the most obvious and perhaps the principal route out of general trade. Case studies of the Holts, the Booths and Sir William Jackson, all Liverpool merchants who created shipping lines, support this view. More substantial evidence comes from Dr Cottrell, who shows that steam tonnage registered at Liverpool increased a hundred times from the late 1830s to 1880, a rate of growth that offered strong inducements. An analysis of the sources of capital for Liverpool steamship 26

27

R a t h b o n e s ' capital in S. M a r r i n e r , Rathbones of Liverpool p . 6 a n d K l e i n w o r t I n f o r m a t i o n Books, G o l d m a n Sachs i p . 161. D e n n i s t o u n s ' in D . M . Evans, Commercial Crisis (1858) p. 137 and Kleinwort G. S. 1 p. 131. R i c h a r d Seyd, Record of Failures and Liquidations 1865-76 (c. 1876) a n d 1875-1884 (1885).

Problems of restructuring mercantile enterprise

211

companies from 1851 to 1881 shows that merchants were much the largest investing group apart from the shipowners themselves. It was in this period that Britain built up much the largest mercantile marine in the world, and there was no evident lack of enterprise here.28 But the question remains, if mercantile enterprise is so much in evidence, why is it that most British grain merchants made such an apparently poor showing compared with Bunge and Dreyfus? The complaint is not one made only or most strongly in this present work; historians of Argentina and the US grain trade have made it several times before.29 The answer must be central to this present research. The subject is a difficult one because international grain firms have deliberately kept their operations secret; Dan Morgan's Merchants of Grain (New York 1979) is written like an enquiry into C.I.A. activities while Green and Laurent's book Bunge & Born is appropriately subtitled Puissance et secret dans Vagro-alimentaire. It

appears that British houses such as Ralli Bros., Sanday and Smyth lost out to European and (later) American firms because powerful British millers such as Ranks took a direct hand in the trade themselves, further reducing the role of middlemen.30 The main effects of this development were felt in the 1920s and 1930s and so lie beyond the scope of the present study, but a substantial point has to be made here. It is that the strength or weakness of mercantile enterprise from the last quarter of the nineteenth century had a great deal to do with that of British manufacturing organisation; the stronger the manufacturing organisation the weaker the mercantile opportunity, even in a trade that lived on its wits and other people's capital. It was the fragmented nature of the old British staple industries, and their slowness in responding to the market opportunities of integration, that allowed and encouraged the merchant houses, old and new, to retain much of the initiative in Britain. 28

29

C. A . J o n e s , International Business, p p . 142-8. P . L. Cottrell, ' T h e S t e a m s h i p o n the Mersey 1815-80: Investment and Ownership', in P. L. Cottrell and D. H. Aldcroft, eds., Shipping, Trade and Commerce (Leicester 1981). Sir William Jackson in S. D. Chapman, The Clay Cross Co. 1837-1987 (privately printed, 1987) pp. 36-9. R. Gravil, 'The Anglo-American Connection and the War of 1914-18', Jnl Latin American Studies, ix ( 1 9 7 7 ) . J . R. Scobie, Revolution on the Pampas. A Social History of Argentine Wheat

30

1860-igio (Austin, Texas, 1964) pp. 101-5. Cited in D a n M o r g a n , Merchants p . 73n.

212

Response to instant communication CAPITAL AND CREDIT

The provision of credit to suppliers and customers had always been an important dimension of mercantile activity, and merchant houses that chose to integrate into manufacturing, mining or plantations very frequently continued in finance. Many of the big international commodity merchants like Louis Dreyfus & Co., Ralli Bros., Heilbut Symons & Co. and Rodocanachis appear in the lists of private bankers in the standard reference work, Skinner's The London Banks. Merchants shifting to manufacturing appeared on the boards of the London-based imperial and international banks that proliferated from the 1860s when joint-stock registration became easy.31 The connection between merchanting and finance continued to be an intimate one. There is thus no general evidence of shortage of credit, rather the contrary where sufficiently detailed records survive. The evidence from the banking side suggests intense competition to grant acceptance credits on international commodity business. The grain trade, though subject to fluctuation and bankruptcy, was as keenly fought over as any. The old-established London merchant banks which were early in the business (Barings in the USA and Argentina, Brandts in Russia and Argentina) found themselves competing with the Credit Lyonnais (which opened in Russia in 1877) and the Bank of London and South America on the River Plate.32 In the 1880s the famous German—Jewish financier Bleichroder moved into 'large grain transactions', acting through Ladenburg & Co. in London and New York. This was in addition to Liverpool banks like Lloyds and the Liverpool Union Bank.33 The more detailed records of James Finlay & Co. allow us to penetrate the problem of funding trade rather further. In 1871 Glasgow head office advised the Calcutta and Bombay branches that the Royal Bank of Scotland would cover acceptances to the extent of £100,000, which would be largely for the piece goods trade at this date. Finlays also had accounts with the Bank of England and Baring Bros.34, while Finlay, Muir & Co. (the Indian wing of the 31 32

33

34

See Chapter 8 for mercantile investment groups. Barings Liverpool letters HC3.35 (note 16). C. Amburger, William Brandt. Jean Bouvier, Le credit lyonnais (Paris 1968) p. 227. U.C.L. Archives, Bank of London & S. America D 35/13 pp.476, 69, D 35/14 p. 503. Kleinwort Information Books USA 1 MS 22031/1 p. 162. Lloyds Bank Archives A/35, B/817. Finlay MSS UGD 91/141 pp. 7, 11-12, UGD 91/32, 91/268.

Problems of restructuring mercantile enterprise

213

organisation) had two with London merchant banks, F. Huth & Co. and the Merchant Banking Co. In 1882-4, when the tea and jute side of the business began to develop, accounts were opened with the Bank of Bengal, the Chartered Bank of India and the Agra Bank in London. The practice of having separate accounts for the subsidiary companies and activities evidently multiplied. At the turn of the century the Champdany jute mill, which had a capital of £200,000, had no less than ten accounts, as follows: Clydesdale Bank Williams Deacons Bank Seligman Bros. London, City and Midland Bank Royal Bank of Scotland British Linen Bank Bank of Scotland Arbuthnot Latham & Co. National Bank of India (Rs 5 lakhs = ) Bank of Bengal (Rs 5 lakhs = )

£10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 30,000 30,000

£140,000 The ten banks can be classified as three English clearing banks, three Scottish ones, two merchant banks and two imperial banks, a neat spread that looks as if it was carefully planned.35 The tea companies were evidently financed in a similar way, for in 1890 we find Finlays' Calcutta manager reporting that he was running as much as £40,000 or £50,000 of bills with different banks for each of the two major companies, but never exceeded £10,000 on any single bank. The sale of goods in South Africa was done mainly under credits supplied by five major merchant houses there, including Mosenthal & Co. (the biggest merchants there) and Steel, Murray & Co., later to be bought by Finlays.36 A similar policy was applied to major suppliers. Finlays bought their piece goods though a Manchester firm called Robert Barclay & Co. which, however, had other business interests, also selling in South America. The initial agreement between the two firms in 1872 included Finlays' view that ' I t is understood that your finance arrangements will be confined to us', and a £20,000 credit was arranged. In 1879 a cash credit account was arranged with the 35

Finlay MSS UGD 91/154.

36

Finlay MSS UGD 91/109/3.

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Royal Bank of Scotland to the extent of £25,000 in favour of Barclays under Finlays' guarantee.37 In subsequent years other bank accounts were opened until in 1903-4 they stood as follows: Merchant Banking Co. Fruhling & Goschen F. Huth & Co. Cunliffe Bros. International Bank of London Ltd. Webster, Steel & Co. ( = J. Finlay & Co.) Bank of Scotland National Bank of India Chartered Bank of India

£30,000 15,000 5,000 (closed) 25,000 (unlimited) 15,000 (unlimited) (unknown)

In this list, the first four were London merchant banks but only Huths could be counted an important firm.38 Finlays had an early connection with Huths through another Manchester supplier, Hugh Balfour & Co., until this firm became bankrupt in 1879 a n d , most probably, the London accepting house lost money. However, competition was evidently intensifying, for in 1905 Ruffers opened an account for £10,000 with Barclays in respect of their Montevideo trade and in 1908 Schroders, having made overtures for two years, offered a limit of £30,000. The Anglo-German merchant banks were particularly pushing at this period. It might easily be supposed that, while leading trading companies like Finlays could open any number of accounts for acceptance credits, smaller firms were not so fortunate. Certainly the banks graded their clients and potential clients, but there were so many banks and so few Ai and A2 customers that many other firms received a ready hearing. The financial records of one of the smaller Anglo-German houses described in Chapter 5 illustrate the point nicely. Simon, Meyer & Co. (now Simon May) were a HamburgJewish partnership that opened an office in Manchester in 1813 and in Nottingham in 1849, apparently with a very modest capital. In the second half of the century their activities were concentrated in Nottingham, exporting lace to the Continent and Russia, and later to Latin America. Their trade and capital showed cumulative growth in the long period from the 1860s to World War I, when lace was highly fashionable and Nottingham emerged as the foremost international centre, particularly for lace curtains. A branch was 37

Finlay MSS UGD 91/141, 91/268.

38

Finlay MSS UGD 91/262/4.

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opened in the French centre of the lace industry, Calais, in 1887. The acceptance credits negotiated by the partners from 1880 to 1914 were as follows:

date

bank

1881 Hardy Nathan & Sons

capital of acceptance cumulative Simon May credits (£) total (£) (£) 10,000

10,000

1885 J. C. im Thurn & Sons 10,000 7,000 1887 Horstman & Co. 2,000 1889 Wechslerbank (Hamburg) 5,000 1889 Fruhling & Goschen 15,000 1889 Marcuard, Krauss & Co. (Paris) 5,000 1890 Brenier (Bremen) 1890 Hardy Nathan + 5,000 1890 Wechslerbank + 3,000 8,000 1896 Bank of Winterthur 3,000 Armstrong & Co. 1897 10,000 Swiss Bankverein 1903 5,000 !9O3 Discontogesellschaft 1911 Fruhling & Goschen 4-10,000 1912 Capital & n.d. Counties Bank

20,000 27,000 29,000

77,413 52,299

34,000 49,000

42,697 59,000 62,000 70,000

57^52

73,000 83,000 88,000 98,000

61,903 164,422 164,422

426,924

A dozen different banks were drawn on, largely continental or, like Horstman and Fruhling & Goschen, of continental origin. The partners' notes show that their banks were urging them to make more use of the credits, and during World War I three further firms (Kleinworts, Konig Bros, and the Colonial Bank) offered a total of £40,000 additional facilities to help them take German competitors' trade. Simon May's experience not only underlines the abundance of acceptance capital available to a firm with a good track record; it also serves to emphasise that London was not always the cheapest source. Of course, capital for acceptance credits was short-term (typically three months) and must not be confused with fixed capital investment in plantations, mills, mines and transport. Relatively few 39

Records of Simon May & Co. Ltd., Nottingham. For further detailed examples of acceptance credits, see S. D. Chapman, Merchant Banking, pp. 115-21.

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merchants were interested in farming or manufacturing, and the evidence of earlier chapters (particularly Chapter 4, the agency houses) suggests that those who integrated back were more worried about what to do with surplus capital than about raising capital. Under the managing agency system, relatively small amounts of capital were needed to secure mercantile control of its overseas suppliers (there is more detail about this in Chapter 8), while in the Orient and on the new frontiers of trade, established mercantile houses often carried large expatriot deposits. Apart from the ever present threat of illiquidity caused by sudden shifts in the trade cycle, or by war, established merchants were little restrained by financial shortages. But this is not to say that there were no financial problems. Three at least can readily be identified. It was mentioned earlier that adequate facilities depended on the banks' credit rating, which should have been based on some objective standard and, in principle, was.40 In practice there was a lot of conflicting information and prejudice so that religious and ethnic minorities like Jews and Greeks sometimes had to be financially self-sufficient within the group, or draw on more sympathetic foreign banks. The banks were constantly exchanging confidential reports with one another and it was easily possible for misinformation to spread. Two or three obvious instances of City prejudice must serve to illustrate the point. In 1873 an American firm of German-Jewish extraction set up as cotton merchants in a large way of business in Liverpool. Dun & Bradstreet, the best-known US credit agency, reported soon after in warm terms. The firm ' are large operators in cotton; last year [1877] they handled 94,000 bales representing about one million sterling. Mr Newgass is estimated worth £20-25,000, is very popular and his simple word goes a long way on Change. He is hardworking and honest.'41 However Baring Bros, in Liverpool took a very different view of the firm. Started here recently with a reported capital of $300,000 [£60,000]. Lehmann Bros, of New York, with whom they were in connection, being partners en commandite with a further contribution of $200,000 [making £100,000 in all]. They have been by far the largest importers of cotton (over 84,000 bales) this last season [1873], besides operating extensively in 'arrivals' and the losses to themselves and their friends must have been 40 41

BB H C 16 ' R e p o r t s o n Business H o u s e s ' defines credit categories i to 4. D u n , foreign registers.n, p . 83.

Problems of restructuring mercantile enterprise considerable. We should certainly not give them documents against acceptance nor do we recommend clean bills on them to be taken as the Union National Bank N[ew] Ofrleans] have recently done. Thefirmwas started with a considerable amount of' stir' and so far as we can make out have been doing a dangerous and unprofitable business.42 In subsequent years Newgass made and lost a fortune in London finance j but on the eve of World War I still appears in the directories as a private banker. 43 The major London accepting houses appear to have had only limited interest in the imperial territories as such and the relatively few reports that appear in their surviving records are surprisingly critical. Thus Kleinworts, the leading accepting house after Barings' fall in 1890, wrote of Jardine Matheson, the most enterprising agency house in China: 'The name of the firm has always been regarded here with a certain amount of uncertainty, no doubt due to the fact that their business is of a highly speculative nature and that they take large interests in enterprises which have not always been successful',44 and of Neumann, Lubeck & Co., the well-known South African trading and investment company: Mr Neumann.., has been mixed up for many years in the South African mining market... Several of the enterprises which he has promoted have been questionable properties and... a large proportion of the business is in connection with the management of the various mining propositions in which they are interested... bankers here are not disposed to give the same credit to a firm in this line of business as they would to a new firm of similar resources which devoted its whole attention to banking business.45 The explanation is of course that the accepting houses measured the merit of their clients by the liquidity of their assets rather than by their enterprise; the cardinal commercial sin was locking up capital in risky enterprises. This is made more explicit in comments on other firms. Thus of David Sassoon & Co. it was said that their capital was given as £500,000 (1908) but 'it is a question to what extent it is in the form of property, mills &c.'. Similarly, it was said of Chalmers, Guthrie & Co., capital is £750,000 (1908) 'but believed to have locked up a good deal of money in San Salvador Railways and therefore less highly thought of than formerly'.46 42 43 44 46

BB Customer Reference Books n no. 2732. S. D . C h a p m a n , Merchant Banking, p . 7 7 . Kleinwort Information Books 22,033/2 pp. 2-3. ibid. UK in pp. 130, 121.

45

ibid. 22,033/1 p. 159.

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The attitude reflected in these quotations, and the abundant capital of many of the leading houses, evidently induced some firms to finance their seasonal needs from private resources to a very late date. David Sassoon was a case in point, as Kleinworts recognised: They do a very large business in the exporting of opium from China and this business is done in the ordinary way by merchants taking advances against the shipments... [they] never ask for any accommodation of this nature and we think it is due to the fact that the partners make the necessary advances in a private capacity and hold the opium as a special hypothecation, thereby obtaining a good rate of interest on their capital. Ralli Bros., as already noticed, confined itself to a cash business to the extent of its available means.47 Self-sufficiency in finance guaranteed safe business but must have inhibited growth in some periods of opportunity. Another major financial problem in this period was the advent of joint-stock organisation under the legislation of 1862. This might appear to have been a splendid opportunity for established merchant houses, but few saw it that way at the time. The anxieties of the dynastic leadership of a typical City firm, Leaf, Sons & Co., was expressed in the autobiography of the third generation leader. As background it should be explained that the firm originated as a London haberdasher in 1790 and evolved into a 'home trade house' specialising in silks, velvets and ribbons. Their principal competitors were Morrison, Dillon & Co., incorporated as the Fore Street Warehouse Co. Walter Leafs sensitive recollections are worth quoting at length: The great rival business of Morrison, Dillon & Co. had quite recently been converted into a limited Company, the 'Fore Street Warehouse Company', and the Morrison brothers had taken out of it and permanently secured three large fortunes. No doubt it would have been possible in the same way to convert Leaf, Sons & Co. into 'The Old Change Company Limited'. As things turned out, it is clear that this would have been the wisest course. But my father chose the other. His motives were various. In the first place, the principle of limited liability was a new one and was still looked upon with suspicion. It was not certain by any means that a limited company would be able to retain the connexion which had been formed by personal contact between partners and customers; it was too early to see how the Fore Street Company would 47

ibid. UK in p. 129. J. Gennadius, Ralli, p. 24.

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prosper, but the signs for the maintenance of its old reputation were none too favourable. Thus the security for the recovery of capital was not unassailable. Then my father, who was devoted to the memory of his dearly loved elder brother, William, could not bear to think of a step which would cut his sons out of a career to which they had been devoted; to keep it still open to them seemed an act of duty to the family. And then there was the strong element of pride in the achievements of his ancestors and himself in building up one of the finest businesses in the City of London. It was, I think, at his last interview with my father, just before his death, that my grandfather had implored him to stick to the old business. As I have already said, the business had reached a. climax of prosperity in the last two or three years. There seemed to be no reason why, with my father at the head with his experience, ability and capital, supported by a new generation of partners, the prosperity should not continue and the deceased partners' estates paid off, while fresh fortunes were being made for the young. And finally I do not doubt, though I cannot recollect that my father ever expressed it, that there was in his heart the sense which is felt by those who have been in ' big business' that it is one of the finest sports in the world; that quite apart from the making of money it is a splendid exercise for the human intellect, and that it is a real contribution to the general advance of mankind; in short, that from the moral side it is a worthy line for the selfexpression of the individual, and may be carried on with all dignity and honour. When, therefore, my father began to suggest to me that not only for the sake of himself and the family, but as a fine opening of a career, I might think of taking upon me the succession to the business, I was quite ready to entertain the suggestion. But it was the sense of duty which appealed most to me; I regarded it from the first as a disagreeable duty. In fact, it took Walter L e a f 18 strenuous years' - 1875 to 1893 - to pay out capital to the families of deceased partners, and consequently throughout this difficult period of trade he was short of capital. In this period Leafs were more typical than Morrisons in the sense that only a handful of City warehousing firms followed the latter into incorporation.48 Another striking instance of resistance to incorporation was provided by F. G. Dalgety, a leading merchant in the Australian wool trade. He suffered 'the greatest anxiety' from shortage of capital in 1848-9 when two partners withdrew. The solution he found was in interlocking partnership spanning London and his colonial bases. This arrangement lasted well until the 1870s, when he ran into intense competition from the colonial banks and wool 48

C. M. Leaf, Walter Leaf 1852-1927 (1932) pp. 112-13. (Anon.) Modern London. The World?s Metropolis (c. 1893) p . 179.

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finance houses. A new partner pressed for incorporation to augment the capital but Dalgety refused to consider the change because, as he wrote: ' From my experience of companies I have a horror of them - and know full well that they cannot be managed to compete with private firms where partners act in accord and common prudence and energy are expressed.' A long feud within the partnership finally resulted in incorporation in 1884, which allowed the firm to survive as one of the leading firms in the Australian wool trade. However there was nothing inevitable about this decision and Martin Daunton, the author of the research on Dalgety cited in this summary, believes that many merchant houses in the same position chose the path of decline and ultimate disappearance rather than adopting company status.4d The problems and opportunities of companies were most keenly felt by the agency houses. For most of the time they appeared to have the best of both worlds by maintaining the advantages of private partnership for their original enterprises in London, Liverpool or Glasgow while claiming the advantages of limited liability for their partly owned overseas plantations, manufacturing, mining and transport companies. The device of managing agency meant that, strictly speaking, these enterprises were independent flotations, but in practice they functioned just like subsidiary companies, financially responsible to and dependent on the holding company. The subservience of these numerous companies, representing the larger part of the modern Indian industrial economy, must seem surprising. The explanation offered by P. S. Lokanathan, whose Industrial Organisation in India (1935) is the most sensible of several commentaries by Indian academics and has a historical perspective stretching back half a century or so, was that the general prevalence and continuance of the managing agency system was because it was so difficult to recruit local capital to start or credit to maintain major enterprises in the country. So late as 1929-30, managing agents were providing more capital for cotton mills than the banks were. In the early years of company promotion in India, the capital was invariably raised by the agents and their connections. The banks supported the agency system ' and indeed practically forced joinstock companies to take agents as the system gave them two 49

M. J. Daunton, 'Firm and Family in the City of London in the Nineteenth Century: the Case of F. G. Dalgety', Historical Research LXII (1989). For further examples see Hilton Brown, Parrys of Madras (1954) p. 198; C. A.Jones, International Business p. 105.

Problems of restructuring mercantile enterprise

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signatures for all loans'. 50 In other words, the agency house system in India owed its continuity to the paucity of indigenous capital for industrial development as well as the scarcity of managerial experience. However, this does not mean that profit margins were always high or that there were no problems with the shareholders. Oral testimony and general historical accounts suggest that the annual general meetings of the managed companies were invariably formalities, rubber stamping the results of the managing agents, but shareholder revolts were by no means unknown. 51 Indeed, it could be argued that tension was inherent in the system, as the managing agents took a fixed fee for their services and could therefore afford to take the long view, while the shareholders looked for maximum return on their investment at an early date. In practice, there was often also tension between the partners in Britain and the local managers in Calcutta, Bombay, Rangoon or wherever the house functioned; the local men inevitably had a more immediate appreciation of the problems while their seniors in London or Glasgow claimed to have a superior sense of strategy deriving from longer experience and direct contact with the capital markets. The various house histories that remain the principal source for particular agency houses seldom reveal anything of such tensions, so specific details are hard to find. However, the abundant records of Finlays record a striking case of open conflict between the principal partner (Sir John Muir) and the shareholders of the Champdany jute mill, which was registered in 1873 and one of four managed by the Glasgow firm in the period down to World War I. In the early 1890s it was said that the best jute mills were paying a divident of 15 per cent, and in the next decade the Investors Indian Year Book (1911) reported the average rate of dividend exceeded 12 per cent for good companies. Over a period of thirty years, Champdany paid nothing for fourteen years and ten per cent in only four years. Sir John Muir blamed poor local management and some of the shareholders blamed Sir John. One of them wrote to him in 1893: There is no public confidence in your management. There is a feeling you have a double interest in such an undertaking [as Champdany] and that your interests as shareholders are largely subordinate to your interests as 50 51

P . S. L o k a n a t h a n , Industrial Organisation in India (1935) p p . 181, 2 1 4 - 2 9 . See e.g. V e r a Anstey, The Economic Development of India (1942) p . 114.

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Managers, Agents and Financiers... The interests your senior resident partner has to supervise and control are so varied and so vast that the affairs of the Champdany Go. can only receive a small share of his time... the way in which the Champdany Co. has managed its purchases ofjute has made it the laughing stock of the business community. The Calcutta man in charge, the future Sir Allan Arthur, said the reason was ' antiquated' machinery and inadequate assistants, ' all to save a few thousand rupees annually in salaries...a most short sighted policy'. When Muir then proposed to acquire another jute mill by drawing on Champdany's reserves, another shareholder sued Finlays. In Maxwell Hannay v. James Finlay & Co. (1895), fraudulent management practices, including the payment of dividends out of capital to cover exchange rate (rupee-sterling) losses, were alleged. The main outcome was that Muir stormed out to India and sacked Arthur, though this did not prevent the latter from obtaining his knighthood and taking a leading role in Ewings for many years.52 This was certainly not a unique case, for in 1899 we find one of the Gladstones confessing to a similar position in Ogilvy, Gillanders & Co. Their jute mills, he wrote, had been a disappointment from the shareholders' point of view but 'have been extremely lucrative to the firm'.53 The majority of cotton mills in India were started by native merchants but run on the managing agency system. Japanese competition in the Chinese market shrank the profits to practically nothing at the end of the century. The situation was aggravated by lax management and the protests from shareholders and financial difficulties of the agents forced the winding up and reconstruction of several concerns.54 In this instance the main beneficiaries, apart from the Japanese, were European firms (and especially machinery agents) who took over the managing agencies. Change was inaugurated by one of them, Greaves, Cotton & Co., in 1886 by projecting a cotton mill on the basis of a commission often per cent on profits. Tea and mining companies soon followed cotton. Nevertheless, a minority of companies were still managed on the original system when Lokanathan reviewed the problem (1935), and

52

53

54

Finlay MSS UGD 91/178/4, 91/274, 91 / n o . R.E.Stewart, 'Scottish Company Accounting 1870 to 1920', Ph.D. thesis, Glasgow 1986, pp. 273, 341-6. Glwyd R. O., Gladstone MSS, GG 2591, Steuart Gladstone to Robert Gladstone 4 June 1899. The problems of the Indian textile industry are elaborated in Chapter 9.

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it is quite clear that the unresponsiveness of the old agency system to the financial pressures inhibited the usual market mechanisms.55 MANAGEMENT CONTROL

In his book on International Business in the Nineteenth Century, Charles

Jones identifies the most characteristic mercantile response to the challenges of the later part of the century as convergence on London. Given the easier communications of the period, he sees the capital market of the City as being the most decisive factor in control, though in fact he writes more about the social and political attractions of the metropolis than about recruitment of capital.56 There is no question that merchants who became financiers invariably migrated to the City, or that some merchants had to draw on City resources to effect necessary transitions, but the problems of effective managerial control from Britain were scarcely solved before the inter-war period and the limitations of any such strategy have to be recognised. The argument of this chapter is that finance imposed few restraints on new strategies for established merchants but that attempts to centralise often took them into deep water. If this has not always been obvious from the various house histories it is because few are candid about their failures or about conflicts between the home partnership and the overseas branches. Dr Jones's detailed examples are not always convincing on this point. Wernher Beit needed many millions to develop their Rand mines (see Chapter 9) and so established an investment banking operation in London, but effective leadership on the Rand was exercised by F. Eckstein & Co. Dalgety moved to London from Australia to run a more effective mercantile operation with local partners (not agents or employees) to maintain the close connection with the wool growing areas. Most telling of all, the Sassoon Brothers split up, one centring in London, the other continuing to live in Calcutta; the latter was much the most successful. That is, the migration to London had little to do with access to capital and a lot to do with social advancement.57 To understand the problems it is necessary to focus more closely. 55

56 57

S. M . R u t n a g u r , Bombay Industries: the Cotton Mills (Bombay 1927) p p . 25, 52, 62. P. S. L o k a n a t h a n , Industrial... India p p . 3 3 8 - 9 . C. A. J o n e s , International Business, Ch. 5. H. Sauer, Ex Africa (1937) p. 174. M. J. Daunton, 'Firm and Family'. C. Roth, The Sassoon Dynasty (1941).

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Perhaps the easiest way of doing this is to quote one of the titans of Victorian trade, Sir John Muir of Finlays. In 1895 he told a management meeting in Calcutta that whether he was in India or Glasgow, he was always to be regarded as the senior managing partner of the firm, ' and that everything in connection with the business of the Calcutta and Colombo firms was to be conducted exactly as the managers believe he would wish to have it done if personally present with all the facts before him'. The ideal system, he suggested, was that of the senior partner of Webster, Steel & Co., whose Rangoon managers had to send a weekly diary to London. The reality was that, far from such intimate control. Sir John's accounts werefiveyears behind schedule at that time. In fact, as his conflict with the shareholders shows, he was scarcely able to keep himself adequately informed of conditions in Britain. Yet Finlays were one of the most successful British firms in India, and much the largest in the tea trade, a position that could only have been maintained by de facto decentralisation combined with sound central strategy for marketing the tea in Europe and America.58 Another interesting case is offered by Ralli Bros. According to the hagiography that followed the death of Stephen Ralli in 1902, the principles of the firm included the rule that no partner or employee was allowed 'to lead a life unduly luxurious or extravagant', while ' A second rule was established in the iron discipline which regulates the relation of superiors and inferiors, and which, indeed, pervades the entire organisation.' The assistants in India were governed by three tomes called 'handbooks' which were packed with details about the rules, conditions and opportunities of trade. The tone of these volumes can be illustrated by a single quotation: We must work in jute as extensively as we can because inactivity costs us still dearer than in other articles. Owing to the extent of our standing and to the additional risks inherent in this article, it is of vital importance that our organisation should be very efficient and that our home firms should be made thoroughly acquainted by us with the position and prospects of affairs on this side... The position and prospects of the crop, information about supplies and shipments &c must be promptly telegraphed home and must be the result of careful enquiries in Calcutta and in the interior on the part of our Agencies. As our business is greatly based on such information, 58

R. E. Stewart, 'Scottish Accounting', p. 221. By 1924 Finlays were responsible for 40 per cent of tea plantations in India UGD 91/141.

Problems of restructuring mercantile enterprise any change must be reported without delay, and our telegrams must be clear and explicit.59 It was no doubt on the basis of such meticulous organisation that Rallis became the premier firm in the Indian jute trade, much as Finlays were in tea. Not much information leaked out from the Greek firms, but there is evidence that even in the tightly organised Rallis central control was far from complete. So late as 1938, a confidential report on the firm's organisation disclosed that' In effect India and London appear to be trading somewhat independently*™

The cable system to the Far East was inaugurated in 1865 but two generations later, in the 1920s, understanding between London and the trading centres was still basic and there was frequent tension between the two. The unpublished reminiscences of a former head of Bousteads, one of the leading British houses in Singapore, serves to make the point: London controlled the produce business, and turnover [rather than markup] was the prime object to provide cargo for the ships. The East was not expected to make a profit — in fact if one did you got ticked off as it was probably at the expense of turnover, so one traded at a loss without ever being told whether London made a compensating profit. The weekly produce letters from London were nearly always rude and scathing, and it was a saying that the ink turned to vinegar as it passed through the Red Sea.61 Excessive centralisation simply stifled mercantile enterprise in its satellite locations. It is easy to see that the success of some of the most dynamic mercantile enterprises of the pre-1914 period, such as Yules in India, Knoop in Russia and De Beers in South Africa, was based on ^-centralisation — i.e. the titans of these organisations (David Yule, Ludwig Knoop and Cecil Rhodes) insisted on spending their careers 'in the field'. In Rhodes' case, this was based on aggressive repudiation of London financial interests, not least Rothschilds.62 At Morgan Grenfell's, Yule's merchant bank in the City, it was reported that Sir David's 'sole idea was Calcutta and he entirely ignored the London office', a comment that was perfectly consistent 59

60 61

62

J . G e n n a d i u s , Ralli, p . 23. C a m b r i d g e S o u t h Asian A r c h i v e : Ralli Bros. Calcutta Handbook 11 (1888). Vols. 1 a n d 111 a r e lost. Guildhall Lib. Ralli Bros. MS 23,834, Report on Organisation (typescript c. 1938) p. 27. G. R. Roper-Caldbeck, 'A Boustead Chairman looks Back' (unpublished history, 1978). See also Owain Jenkins, Merchant Prince (1987) pp. 15, 20, re tensions at Balmer Lawrie & Co. S. D . C h a p m a n , ' R h o d e s a n d t h e City of L o n d o n ' , Historical Journal, x x v m (1985).

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with his lifelong absorption in Indian business.63 Ludwig Knoop was a rather more complicated story; son of a Bremen small trader, he was apprenticed to De Jersey & Co. in Manchester and effectively took over the firm when it became insolvent. De Jerseys were in fact the British arm of his Russian cotton spinning mills and huge American cotton exporting organisation, and never controlled or led it. The 'centre' (Manchester), that is to say, never controlled the 'periphery' (Russia).64 It is equally familiar — or certainly was to contemporaries — that some of the major disasters and near-disasters in the mercantile history of the period were caused by excessive centralisation. The Kleinwort report on Jardine Matheson cited earlier is an obvious case in point. Even the ' princely hong's' closest allies, Jardine Skinner, were critical of the London principal: James Keswick ' seems poor chap to have made a mess of things both in business and in a private way', and the mismanagement of their finances represented a 'near-miss' for Britain's leading house in China.65 The most spectacular crash between the Baring crisis (1890) and World War I was that of Arbuthnot & Co., merchants and bankers of Madras, caused by ruinous speculation in London nourished with funds from Madras. Their closest rivals in the South Indian trade and finance, Parrys, did not miss the point. 'A London office was not a wholly unmixed blessing... there was always the risk that the London office might take the bit in its teeth and from the representative might become the ruler', Parrys' historian wrote.66 Instant communication opened up the possibilities of global organisation but did not prescribe how control could effectively be maintained. The most effective challenge to the major British merchants, apart from European competitors, therefore came from the local (indigenous) traders, who gradually benefited from easier credit and faster communications. The case of the south Russian grain trade is unusually well documented. The Russians were so impressed by the far-reaching changes in the organisation of this trade from the 1870s that they liked to talk about the ' democratisation' of the trade. The extension of the railways from Odessa and the Black Sea ports and 63

64 65 66

Morgan Grenfell records, Calcutta business, Misc. 2 file, Vivien Hugh Smith to T. S. Catto 3 Nov. 1921. Obituary of Sir David Yule in The Times 5 July 1928. S. Thompstone, 'Ludwig Knoop'. Jardine Skinner Guard Books No. 1, 29 Mar. 1892, Blue folder 1, 16 July 1891. H i l t o n Brown, Parrys of Madras p p . 132, 175-7.

Problems of restructuring mercantile enterprise the development of a credit system by the state bank, the private banks and the railways encouraged Russian dealers to send their own employees to the plains to buy direct from the peasants or local dealers, ousting the Jews and Greeks who had controlled the system in earlier years. Much less capital was now required as grain was moved faster; in the 1860s a handful of rich Russian wholesalers might have a capital of as much as a million roubles (£100,000) but by 1910 200,000 roubles (£20,000) was considered very rich. However, in the north of Russia, where the trade focused on St Petersburg, the grain still had to be carried great distances (5003,500 km), so the old system continued much longer. The leading northern traders about 1880 were still London-based (Table 7.3); indeed the old form of trading organisation continued until 1890—5 and firms were able to diversify into other activities down to World War I.67 China provides another striking example of the resurgence of indigenous enterprise in the period. In 1873 the British Consul at Canton noted that ' a trade which was in the hands of the few has drifted into those of the many' because the need for a large capital had been removed by improvements in banking facilities. The telegraph and better mail service led to the replacement of these commission agents by Chinese traders and compradores in the next generation so that, by the end of the century, British merchants were limited to a few major ports, where piece goods were sold to those who came from the interior.68 The transition period in the cotton trade was spread over a longer period of time, but a variation on the same theme is discernible. In the 1880s it was obvious that many of the old merchant firms engaged in general Atlantic trade were collapsing and the trade fell into the hands of much smaller enterprises often with a capital of only £10,000 or £20,000, who cut costs by running a simple organisation based on close transatlantic ties. The first decade or two of this century saw the four or five US-based firms with European branches and a network of collecting points and presses on the cotton belt 67

68

L. J u r o w s k y , Der Russische Getreideexport ( M u n i c h 1910) esp. p p . 4 6 - 6 2 , 8 5 - 9 . C A m b u r g e r , William Brandt. C . Prevost, Export of Grain (St Petersburg 1878-80), p r i n t e d broker's lists in Brandt MSS, Nottingham Univ. Lib. C . A . J o n e s , International Business p. 107. F. S. A. Bourne, Report of the Mission to China (Blackburn 1898) esp. pp. 22-3, 36-7. Bourne emphasised that his remarks on the decline of British commission agents did not apply to major firms like Jardine Matheson (pp. 127-8); developments in these firms are examined in Chapter 8.

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begin to pull ahead of European rivals and associates (Table 7.1). The most successful of these American firms, Anderson Clayton, was formed at the Liverpool end by a linking partnership with an old firm of brokers, Pennefather & Mills, while another leading house, Albrecht Weld & Co., was reported to work closely with Ralli Bros, for Indian cotton.69 Expressed in terms of the relationship between London, Liverpool, New York and the US cotton belt, this change must surely be identified as one of decentralisation to those in close touch with the producing areas. The grain trade is particularly interesting because some of the leaders that emerged in the early years of this century (Table 7.4) still retain their position.70 The secrecy of their operations prevents any decided view, but it appears that both Dreyfus and Bunge & Born maintained their dominant positions from their strong decentralised bases in Argentina, and Rallis occupied a comparable position in India and Balfour Williamson in California. By contrast Ross T. Smyth and Sanday & Co. adopted a deliberate strategy of not committing themselves to any single grain supplying country and limited evidence available to researchers prevents us from saying they were wrong, for capital is not the same as profitability. However, it can surely be said without fear of contradiction that, in South America as in the American plantation states, the continuance of strong local representation was a prerequisite of success. The common factor in these three examples is that British merchants (and foreign nationals generally) had less opportunity than local enterprise to integrate back to their sources of supply or to their markets. Where there were opportunities to restructure in this way, as in the imperial territories, British enterprise could be impressive. This is a theme that must be explored in the following two chapters. CONCLUSION

This chapter has highlighted some of the difficult problems for merchants in a period of transition. It is clear that instant communication caught traditional mercantile practice in a scissor movement between the pressures of shrinkage of middleman activities on the one side and the opportunism of indigenous traders 69 70

S. D . C h a p m a n , Merchant Banking p . 138. John Killick, 'Cotton Marketing'. Kleinwort Information Books, N.S.II pp. 57-8. BB CRB 3/2 p- 19-

Problems of restructuring mercantile enterprise overseas on the other. The most vulnerable British group were the scores of overseas commission agents, many in a small way of business, identified in Palmerston's survey. Like so many small businesses, their life was characteristically short and their fate unknown. Most middlemen brokers were quickly forced out, if the experience of the Liverpool cotton brokers is any guide. The international houses were subject to additional pressures as the continental countries and the USA industrialised and their importance declined sharply in the later decades of the century. The home trade houses were squeezed by the rise of major retailers and looked overseas for outlets, intensifying competition with established merchants. The well-known strategies available to the survivors were fraught with difficulties. Manufacturer-to-retailer operations were complex and expensive, and even leading merchant—manufacturers were compelled to withdraw. Commodity broking was a growth area, at any rate until the end of the century, but, as global sourcing emerged, became a highly complex operation where intimate knowledge of one or more producing areas (and not least the local trading community) seems to have been the key to success. Finance was a possibility on the City's lower rungs, but as London became the Mecca for world financial interests and leading bankers from Frankfurt, New York and Paris opened branches, this was no easy option and there were few successes to point to. Credit was easily accessible to all established firms, but merchants enjoyed no particular favour in this. Instant communication did not mean easy communication between the centre and the periphery, except in matters of routine ordering of standard commodities. Some form of agency was still easiest for both manufacturer and merchant. If merchants were to have a future, a solution had to be found which could exploit the name, experience and credit of the established house, and move into new sectors of trade without assuming all the risks involved in excessive centralisation or 'lock-ups' of capital. The outcome of the search for a new strategy is examined in the next two chapters. Meanwhile it is important to emphasise that the survival of mercantile enterprise in manufactured goods or produce was dependent on the structure of the industry served. The new sciencebased industries that generated multinational companies were relatively late arrivals in Britain (at any rate compared with the US)

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and the only significant examples in Britain's main export commodity (textiles) were J. & P. Coats (sewing thread) and Courtaulds (viscose fibres), both peripheral specialisms. Other textile manufacturers and combines failed to make a significant impact on overseas markets so that the growing international business continued to be dominated by merchants. The maintenance of this traditional business allowed those in imperial areas time to develop agencies for more sophisticated products, to shift over to investment in local industries, and even to move to the service of some more effective foreign competitors of British producers.

CHAPTER 8

British-based investment groups before igi4

Research by economic historians into new forms of business organisation in the nineteenth century has cast the British role in a poor light. The British had shown little enthusiasm for joint-stock organisation for much of the century or for the credit-mobilier type of financing of industrial development. The multinational corporation was, it appears, largely an American phenomenon, with only late and limited indigenous development in Britain. The multidivisional corporation was again entirely a creation of American managerial creativity. The trust was, as we have long known, an outcome of German dynamism.1 Even the British banking scene continued to be dominated by family dynasties, while overseas investment in business enterprise, both colonial and foreign, was more restrained than historians had long thought.2 The consequence appears to be that the small-to-middling business remained the most characteristic form of enterprise, even in the 'leading sectors', for longer than the early writers led us to suppose. In a wide range of manufacturing and service industries the characteristic structure featured a multiplicity of diverse specialists whose leadership was addicted to family and (if possible) dynastic control.3 The evidence for this situation has been extensively researched and is quite convincing. Yet, so far as the British position in the world economy is concerned, some misgivings must be allowed to surface. Could the world's largest and most dispersed empire, 1

2

3

There is a large literature on this subject but see especially, P. L. Cottrell, Industrial Finance i8jo-igi4 (1980); J. M. Stopford, 'The Origin of British-based Multinational Manufacturing Enterprise', Bus. Hist. Rev., XLVIII (1974); A. D. Chandler, 'The Growth of the Transnational Industrial Firm in the US and UK', Econ. Hist. Rev., xxxm (1980) pp. 396-410; and H. W. Macrosty, The Trust Movement in British Industry (1907). D. C. M. Platt, 'British Portfolio Investment Overseas before 1870: Some Doubts', Econ. Hist. Rev. xxxm (1980). S. D. Chapman, The Rise of Merchant Banking (1984). See e.g. L. Hannah, The Rise of the Corporate Economy (1976) Chs. 1, 2. 231

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created - so we are persuaded - primarily from economic motives,4 be entirely sustained, in all its diverse activities, by traditional entrepreneurial and family enterprise? Was there nowhere any increase in scale commensurate with the mighty growth of empire and world markets? Most research has been focussed on manufacturing industry, yet the traditional British genius was said to be mercantile rather than manufacturing, a sector that has attracted relatively little attention or research money, and it would be sensible to look for evidence of new kinds of organisational response to the boundless opportunities of the great age of imperialism.5 The far-reaching changes in mercantile organisation in the last quarter of the nineteenth century have been sketched in this book. We have seen that the introduction of the telegraph revolutionised international communications and that in London and Liverpool the general merchant and the commission merchant were superseded by specialised commodity brokers acting as principals. Unfortunately the standard works on this subject do not attempt to analyse market membership, though they leave some impression of family firms and dynasties.6 Deficiencies in British entrepreneurship were offset by the migration of foreign entrepreneurs - especially Germans, Greeks and Americans — to British commercial centres.7 This outline probably accounts for the more important part of the British response, but not the whole of it. The specialised commodity brokers were in direct and daily contact with world suppliers, but they were not themselves suppliers from foreign and colonial sources, much less the generators of materials of international trade. That fraction was originally performed by general merchants and commission agents, but as the chain of middlemen contracted they were often under pressure to look elsewhere for business. At the same time, the overall demand for raw materials and foodstuffs was increasing by leaps and bounds. In this situation, a number of general merchants and original suppliers with established 4

5

6

7

A.Hopkins and P.J.Cain, 'The Political Economy of British Expansion Overseas 1750-1914', Econ. Hist. Rev., xxxm (1980). The main exception to this generalisation is Blair King, ' Origins of the Managing Agency System in India', Journal of Asian Studies, xxvi (1966). T. Ellison, The Cotton Trade of Great Britain (1886). G. L. Rees, British Commodity Markets (1964). P. Chalmin, Negociants et chargeurs: La saga du ne'goce international des matures premieres (Paris 1983). Sir P. Griffiths, The History of the Indian Tea Industry (1967) Ch. 43. Ch. 5, above.

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reputations evolved into investment groups, a form of organisation defined neither by contemporaries, nor by the writers of numerous commissioned histories, nor indeed by economic historians. Historically, an investment group is simply an entrepreneurial or family concern whose name and reputation was used to float a variety of subsidiary trading, manufacturing, mining or financial enterprises, invariably overseas and often widely dispersed. The real economic strength of the group was concealed from the public, and is still largely concealed from historians, by the practice of preserving the parent organisation as a partnership or private company, while the activities it owned or controlled were often registered abroad and run by junior partners or managers there, sometimes under quite different names and local legislation. It was a device that developed from various starting points to maintain effective economic power in a few hands, but its very size and diversity made it much more than a family business in the accepted sense. At the same time, it was able to avoid the clumsy leadership of such manufacturing giants as Imperial Tobacco and C.P.A. that were federations of factious family interests. This chapter attempts to assemble the little that is known about this phenomenon by surveying some of the major sectors of international trade, India, China and the Far East, Russia, South Africa, Latin America and Australia. Leaving the details aside for a moment, it is not difficult to identify the economic logic behind the organisation of trade. In the course of the revolution in communications that extended worldwide during the last three decades of the nineteenth century, general merchants were increasingly caught in a scissor movement, for while the chain of mercantile links contracted, the financial sector (the traditional escape route of successful merchants) was dominated increasingly by the merchant and international banks in which the great merchant houses were themselves partners or investors. Several prominent first-class houses disappeared in the 1870s and 1880s. Meanwhile, the rate of interest continued at higher — often much higher — levels abroad than in Britain. The old-established firms were familiar with local investment conditions and opportunities in the countries in which they had won their fortunes and reputations, while London merchant banks, company promoters, stockbrokers and the investing public at large were wary of unproved foreign and colonial ventures,

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especially those in mining and manufacturing.8 Partners who accumulated capital during their years of overseas service would leave it invested in the organisation, and when they were promoted to the home partnership or retired from business it was invariably more profitable to leave it there than take it out. The business also attracted the loyalty and capital of family connections, friends and a wider circle of adherents both at home and in the overseas bases. A more specific reason for the investment group, later rationalised in South Africa, was that of spreading high-risk investments. It was widely accepted that the risks of deep-level mining were so high in relation to fluctuating market demand, and capital needs so immense, that the initial burden had to be shouldered by an exploration company or financial group. Having proved an economic reef, the finders might then appeal to a wider investment public, in practice rewarding themselves by maintaining control over groups of mines and other properties they did not own.9 However, South African investment groups were by no means the first or only such concerns, as we shall see, to promote investment groups. This identification must be related to the exploration of other historians in this jungle. The activities of mercantile investment groups should be distinguished from portfolio investments overseas.10 The present chapter deals with the diversification and redeployment or mercantile capital, most characteristically in the course of the evolution of the business, or when assets were acquired by default of debtors, or to find an outlet for surplus capital. Portfolio investment simply represents wealthy individuals or firms seeking optimum returns from diversified shareholding. Focus on trading, manufacturing and mining interests in a firm with merchant origins does not, of course, deny the existence of other types of mixed enterprise emerging in the period. Multinationals have already been noticed several times and mining exploration companies and the so-called free-standing overseas investment companies were also important. Their roles will be compared to those of mercantile investment groups in the final chapter. The phrase 'British-based' in this 8

9

10

S. D. Chapman, Merchant Banking esp. Ch. i. J. W. McCarty, 'British Investment in Overseas Mining 1880-1914', Ph.D. thesis, Cambridge 1961. S. H. Frankel, Investment and the Return to Equity Capital in the South African Gold Mining Industry 1887-1965 (Oxford 1967) p. 23. Charles Jones, 'Great Capitalists and the Direction of British Overseas Investment in the late Nineteenth century', Bus. Hist, xxn (1980).

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analysis also needs a word of explanation. By no means all the firms listed were British, but all had a base in Britain and conducted a large part of their trade or financial operations (or both) through London. Since foreign-born merchants made such a major contribution to British overseas trade and finance in the nineteenth century, their exclusion from consideration would result in gross distortion.11 INDIA, CHINA AND THE FAR EAST

The investment groups originated in the Orient in the special circumstances that surrounded British trade to India, China and the Far East. The monopoly of the British East India Co. began to be eroded in the 1780s, when various former employees began to trade on their own account. In course of time the most successful of these concerns was Paxton, Cockerell, Trail & Co., which was started about 1781 in Calcutta, and presently fell under the control of an exnaval officer called John Palmer. The abundance of money in Calcutta in 1822 caused the interest on the Company's debt to be progressively reduced from 8 to 4 or 5 per cent and led investors to deposit large sums with the agency houses, to which they responded by taking deposits only on fixed terms. Overflowing with deposits, the agency houses invested heavily in indigo factories, sugar plantations, ships, agricultural and building speculations, docks, and loans to mercantile firms in Singapore, Java, Manila and other places, as well as to their local customers. It was estimated that by 1830 the total liabilities of the six agency houses amounted to £17m., of which £$vn. was accounted for by Palmers.12 As is well known, Palmers became bankrupt in 1830, followed at intervals by the five other leading houses possessing similar investments. However, the system they created was too useful to perish and never lost the respect of the Indian communities. The partners carried on their bankrupt firms for many years afterwards, and in the course of the next generation the system was taken up by other British merchant houses, including some based in Liverpool and Glasgow.13 Experience showed that because of the risks connected with distance, war and financial crises in the India trade, 11 12

Ch. 5, above. Sel. Comm. on Foreign Trade, Third Report, Parl. Papers, 1820,11, p. 218. Bodleian Lib., Palmer MSS, esp. D107. J. W. Maclellan, 'Banking in India and China: A Sketch', Bankers Mag., 13 LV (1893). Ch. 4, above.

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Response to instant communication Table 8.1. Agencies of Andrew Yule & Co. in India, i8gg Jute mills Budge Budge Central Delta National

£330,000 140,000 127,000 100,000

£697,000

Cotton mills

Bengal Mills

£200,000

Coal mines

Adjai Coal Co. Bengal Nagpur Katras

Rs 350,000 225,000 500,000 1,075,000

= £100,000

£40,000 50,000 20,000 8,600 15,000 30,000 16,000

£l 79.60°

Tea estates

Assam Tea Banaharat Choonbutti Mirzapore New Doars Selim Singtom Flour mills

Howrah

£25,000

Other interests

Mirzapore carpet factory Eagle Soap and candle works Total

n.d. n.d. £1,201,600

Source: Thacker, Spink & Co., Directory of the Chief Industries of India... and... Tea, Coffee and other Estates (Calcutta 1899). See also (anon.) Andrew Yule & Co. Ltd. i86j-ig6j (privately published, 1963) and Thomas Sivewright Catto {iSyg-ig^g). A Personal Memoir and a Biographical Note (privately published, 1962).

satisfactory trading results could only be achieved by employing a large capital and 'a very extended range of operations'. Given a large capital and high degree of liquidity, it was easy to make money by accepting deposits at 6 per cent and lending to planters and manufacturers at 10 per cent.14 At the turn of the century the largest and most diversified of the Indian managing agencies evolving into investment groups was most 14

Sel. Comm. on Manufactures, Parl. Papers, 1833, vi, pp. 138, 196, ev. of G. G. de H. Larpent.

British-based investment groups before igi4 probably Andrew Yule & Co. It was directed by (Sir) David Yule, whose single-minded business career was referred to in Chapter 4. The Yules came of a Manchester textile trade background and opened an agency in Calcutta as an outlet for piece goods in 1863 but already in the early 1870s were investing in a coal mine and cotton mill. The concentration on jute mills only appeared in the 1890s when David Yule took command. Yules' range of interests — jute, cotton, coal and tea — was pretty representative of the Indian houses at large. The only specific advantage of the firm, apart from the principal's capacity for work, was his personal connection with Vivian Hugh Smith, a partner in the London merchant bank Morgan Grenfell & Co. The American parent of this firm was of course the foremost among investment bankers committed to industrial development, and Morgan Grenfell were early into what is now called corporate finance, but the benefits for Yules are not on record. Table 8.1 shows that Yules controlled assets in excess of £i*2m., but their actual capital was evidently much less; in 1918, when the business was twice the size, it was sold to Morgan Grenfell for £o*6m. Possibly the most successful investment group operating in the Far East was the Scottish house Matheson & Co., which for many years was closely associated with, and in 1912 entirely bought out by, Jardine Matheson & Co. of Hong Kong and Jardine Skinner & Co. of Calcutta. Jardines' fixed capital investments began with a silk filature in Shanghai in 1870 and a sugar refining plant in Hong Kong in 1878. In the same decade they were employing mining engineers to test and report on potential sites in China, Malaya and Korea and built the first railway line in China. In the 1880s they set up and ran a shipping line and controlled Hong Kong's dockyards. Meanwhile Mathesons bought Rio Tinto mines (1873) and pioneered gold mining in the Transvaal. Several copper mines followed. In the 1890s, acting as agents of Platt Bros, of Oldham, Jardines built cotton spinning mills at Shanghai and Hong Kong to meet the incipient Japanese competition. Along the way they regularly extended their banking and insurance interests. When Matheson & Co. was incorporated in 1908 the issued capital was given as £200,000, but the capital invested in the various subsidiary companies controlled by them was many times that amount; the mining interests in which they shared alone mounted to at least -£7111. Most of this capital, so far as is known, was subscribed to jointstock companies managed by Matheson such as the Indo-China

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Matheson & Co., London

I Mining

Financial

RioTinto 1873 Transvaal Exploration Co. 1884 Mountain Copper Co. 1899 Paruco Copper Co.1899 Caucasas Copper Co. 1904

Shipping

Merchants

Jardine, Matheson & Co., HK

Railway building Shanghai-Woosung RW 1874-6 China RW Co. 1887 Anglo-Chinese Corporation (with HK& SBC) 1898

I

HK & Kowloon Wharf Co. 1886 HK Land Co. 1889

China Sugar Co. 1878

Shanghai Silk Filature 1870 Ewo Spinning Co., Shanghai 1895 Jardine Spinning & Weaving Co., 1897

Canton Insurance Office 1836 HK Fire Insurance Co.1868 Ewo Bank, Shanghai 1863-7 Peking 1870 Chinese government loan contractors

China Coast Steam Navig'n 1872 Indo-China Steam Navig'n 1881

Key: HK = Hong Kong Figure 8.i. Structure of the Matheson Investment Group c. 1914.

British-based investment groups before igi4 Steam Navigation Co. (1881), the Ewo Bank of Peking (1870), the Hong Kong Fire Insurance Co. (1868), the Jardine Spinning & Weaving Co. (Hong Kong, 1897) and the British & Chinese Corporation (1898), a joint venture with the Hong Kong & Shanghai Bank (in which Mathesons were major shareholders) formed to build railways in China. There are at least three substantial business histories devoted to Jardine Matheson & Co., but none of them make a serious attempt to analyse the policy behind this proliferation of enterprise or to estimate its overall value. The financial records of the Jardine Matheson & Co. deposited at Cambridge tail off in the 1880s, and the present company declines to release further information. However, some notion of the size and diversity of the organisation may be conveyed by the adjacent figure showing Matheson & Co.'s investments on the eve of World War I.15 Fortunately other business histories are a little more forthcoming, particularly that on Matheson's principal rival, Butterfield & Swire. The historians of this aggressive firm confirm that the difficult trading conditions in the Far East in the 1870s acted as the major stimulus to the development of a diversified business in which the components would feed each other. John Swire's extension from China shipping to sugar refining, insurance and dockyard development was prompted not only by the example of Jardine Matheson, but by the need to sustain his fleet at work. For most of his career he was short of capital so drew in friends as shareholders; in 1876 the partnership capital was £0*75111. but over ^ o m . was committed to the other interests. The agency houses whose main interests were in India evidently followed a different course from those whose primary links were with China. Probably the best documented case is James Finlay & Co., a Glaswegian house founded in 1745 and originally strong in the cotton trade and industry. When Sir John Muir took over the leadership in the 1860s, the traditional policy underwent dramatic revision. Muir decided that cotton gave insufficient employment to 15

The full bibliography of Mathesons and 29 other investment groups included in this study is contained in the Appendix. Subsequent footnotes are therefore limited to supplementary references. Capital invested in mining has been calculated as follows: RTZ £3-5111., Transvaal Gold Co. £0-3111., Mountain Copper Co. £ r 2 m . , Panuco Copper Co. £0-33111., Caucasas Copper Co. £1-3111. C. E. Harvey, Rio Tinto Co. (1981) p. 19. Standard Bank Archives, Jo'burg, Inspection Reports, Pilgrim's Rest, 1884-90;^ W. McCarty, 'Overseas Mining', Ch. 5.

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the partners' capital and turned to tea as a trade with more growth potential. Another agency house, Cockerell & Co., had already demonstrated the possibilities with the £0*5111. Assam Tea Co. (1839) so the investment was in no way a speculative one.16 From the tea estates the Finlay partners went on to investments in Indian jute mills (from 1873), shipping (from 1882) and cotton mills (from 1902). In much the same way, when Henry Neville Gladstone, a son of the prime minister, took over Ogilvy, Gillanders & Co., another old Scots house, in the 1880s, he saw that the old shipping agency and consignment businesses could no longer be relied on as a mainstay of the business, and the firm shifted its capital to the development of Indian industries, particularly indigo factories, jute mills, railway development, coal mining and syndicates for the mining of copper, diamonds and gold. In the early years of this century they spread their interests to include two Russian petroleum companies and the Russian Collieries Co. It is interesting to note that a leading merchant bank characterised the senior partner as a representative rather than outstanding business man. Similar details are available on Wallace Bros, who floated a string of subsidiary joint-stock companies beginning with the Bombay-Burma Trading Co. in 1863 (intended to exploit the teak business) and from this success moving on to Arracan Ltd. (Siamese trade) in 1885 and the Indo-Java Rubber Planting and Trading Co. (1906). The Company's official history records that the Dutch East Indies and Malaysia were explored for investment possibilities in oil, gold, coffee and rubber. Rather similar but less well-documented investments can be found in the development of Mackinnon, Mackenzie & Co. and Binny & Co. (now the Inchcape Group), E. D. Sassoon & Co. (Anglo-Persian Jews originally competing with Mathesons for the opium trade), R. & J. Henderson, the Borneo Co. agents, and Guthrie & Co., who borrowed £200,000 from the King of Siam to sustain their rubber estate investments. A careful analysis of British investment in Malayan plantation rubber in its main period of growth between 1904 and 1922 shows the major role of the agency houses. However, by this time the local depositors in India and the Far East had evidently given way to much stronger financial support from the home country, at any rate in secure investments in the British colonies. Few partnerships that were running in the 16

H. A. Antrobus, A History of the Assam Co. (Edinburgh 1957).

British-based investment groups before igi4 traditional way might now be regarded as something of a curiosity in the City. The transition from the old system to the new was eased, at least among firms in the vanguard, by the growing size of partners' capital left in the business, and by the growing flow of funds from the agency, banking and insurance business. Certainly investment groups came in various forms and guises from around the turn of the century. Arthur Lampard of Harrisons & Crosfield, originally a firm of tea importers, became a leader in the development of rubber plantations when his Far Eastern tours opened his eyes to the potential. His firm had only modest capital and, initially, limited interest, so most of a long series of issues were made through the Stock Exchange. Marcus Samuel launched his Shell Transport & Trading Co. with the support of seven other Far Eastern trading houses to form what was originally called the ' Tank Syndicate'. The Samuels subscribed £ r 2 m . out of the original (1897) capital of £i*8m. but reserved entire control to themselves, a characteristic feature of investment groups. Though Shell's assets reached £ i r o m . in 1918 they still had entire control. LATIN AMERICA

Although the investment group is most familiar in India, China and the Far East (albeit disguised by the phrase 'agency house'), it also appeared in most other sectors of British overseas trade. Latin America and Australia were not the most fertile ground for this form of capitalism but, perhaps because of the difficulties, the surviving records and literature relating to the groups operating there are rather more informative. The best-known name was of course Antony Gibbs & Sons, originally a small merchant house exporting textiles to Spain and South America, then, from the 1840s to 1860s, holders of the wellknown Peruvian guano monopoly. The development of the business is most strikingly epitomised in the words of Vicary Gibbs, who was senior partner at the turn of the century. Leaving aside the period from 1808 to 1845, when he wrote 'the business was being gradually worked up', Gibbs divided his firm's history into two periods. In the first, from 1845 to about 1870, he believed that the business was still concentrated on a very few lines, ' all who were engaged in it, both chiefs and juniors, were active working partners', most of the business was simply consignment trade which was 'enormously profitable' (£80,000-^100,000 p.a.), so that 'the borrowed capital

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communication

formed only a small proportion of the capital of the firm'. In the second period, which he knew better from personal experience, he saw great contrasts: The business became extraordinarily various and widespread. There was no active working head, and latterly even junior members went into Parliament. Consignment business had practically ceased and thefirmwas forced into all sorts of enterprises of which it had no experience. But for the one business left which the firm understood viz. Nitrate, the business as a whole was extraordinarily speculative and unprofitable. The borrowed capital formed a very large proportion of the capital of the firm...17 The variety of business developed in the second period has not yet been fully written up (though there is ample documentation), but it certainly included nitrate factories and railways (in Chile), shipping, copper mines, various Australian interests and a large portfolio of stocks and securities. Vicary Gibbs thought the business had come to closely resemble a trust company. Gibbs' experience in South America was in itself unique, yet it exhibits features that were familiar to many established merchant houses at the period. Prosperity and high profits in the middle decades of the century were succeeded by severe competition in which a new generation, casting about for easier ways of supporting its gracious life-style and public service, was willing to defy the conventional wisdom of mercantile forebears by making long-term commitments to new ventures in developing countries. Living beyond their means or aspirations, the new merchant adventurers used their name to recruit capital from connections and clients to float a variety of overseas development projects. In general, only the success stories have (so far) been recorded, but in Gibbs' case, liquidity crises are on record in 1876, 1884, ^ 9 0 , 1894 and 1920. Australia in particular swallowed up more capital than the partners and their clients could easily afford.18 Other British investment groups active in South America appear to have been less speculative and to have initiated joint-stock enterprises in a more formal way. Balfour, Williamson & Co., founded in Liverpool as forwarding agents in 1851, and subsequently prominent in the grain trade with California, set up the Pacific Loan & Investment Co. in 1878 to extend their interests on the west coast of the USA, and in Chile and Peru. Initially most of the investments were connected with the grain trade (flour mills, warehouses, 17 18

Guildhall Lib., Antony Gibbs & Co. MSS 11,024/1, memo of Apr. 1902. Anthony Gibbs & Co. MSS 11,042/2, 12 Dec. 1883, 8 Jan. 1891.

British-based investment groups before igi4 elevators and wharves) but interests were also taken in fruit farms, a coal mine and iron ore deposits. Trading connections were encouraged to deposit money with the London house, which in turn advanced credits to Chilean nitrate companies on a large scale. 'No matter where the ownership lay, management was always the responsibility of Balfour Guthrie', the US organisation, according to the firm's official historian Wallis Hunt. The Chilean operation (Williamson Balfour) made issues for the South American companies and accepted seats on their boards. In the first decade of this century, these investment activities were greatly increased to include petroleum and cement, and the flour milling side was built up. The partners' 'responsible capital' in 1913 was £2*0111., but figures scattered through Hunt's book indicate that they controlled investments worth at least £4-475111. in 1913. The evolution of Knowles & Foster seems to have followed a similar pattern but on a much more limited scale. The firm started in the Brazilian trade in 1826 and diversified in the period when Thomas Foster Knowles was the most active partner (1878—1939). The best-known venture was the Rio Flour Mills Co., incorporated in 1886 with an initial capital of £0*25111. The mill company, part of whose capital was owned in Brazil, in time launched its own subsidiary shipping company and cotton mill; the capital reached £o*6m. in 1912 and £o*8m. in 1919. It is an interesting commentary on the source material that while Gibbs and Knowles & Foster were included in W. Skinner's standard work The London Banks, Balfour Williamson was not. RUSSIA

During the first three-quarters of the nineteenth century a large part of British overseas trade, especially that to the Continent, was conducted by continental merchant houses with branches in London, Manchester, Leeds, Liverpool and other commercial centres (Chapter 5). The 'international houses', as they have been called, provided a great deal of the enterprise, capital and specific expertise needed to translate British production techniques into commercial success, especially in the markets of Europe and Asia Minor. They were largely of German and 'Greek' (Ottoman Christian) origin, but included a sprinkling of Dutch, French, Italian and other merchants. One of their most singular achievements, still uncharted, was to link the UK economy with the great Russian market which, for very different reasons, was short of the

243

Wogau & Co.

Banking

Sugar

London, 1865

Paper

Chemicals

Metals

(Gubner Cotton Printing Mill, 1871) (Ludwig Rabenek Textile Mills, 1879)

Troitsko-Kondrovsky Paper Mills, 1858

Moscow Sugar Mill Co.,1873 (Yakor Insurance Co., 1872) (Russian Bank for Foreign Trade,1871) (Riga Commercial Bank, 1872) (Moscow Discount Bank, 1869)

Cotton

Kolchugin Brass & Copper Mills, 1875 Puskkov's Behoiets Iron Mills, 1874 Moscow Metalworks

Building materials

Tea

Kara van Tea Co.,1900

Riga Cement Works, 1875 Moscow Cement Works, 1875 (Water & Gas Supply Co, 1870)

Lyubimov, Solvay & Co. Soda Works, 1887 Moscow Electrolytic Works, 1913 Note: firms in brackets are those in which Wogaus had a participation rather than full ownership. Figure 8.2. Structure of Wogau & Co., Moscow and London, in 1914.

British-based investment groups before igi4 indigenous mercantile enterprise. Many of the German houses originated in Hamburg where they had traditional trading links with the Baltic ports as well as England, while the Greeks had longstanding connections with the Russian Black Sea ports.19 As France, Germany and other parts of the Continent industrialised their potential as export markets fell away, and the merchant houses that had prospered in European trade shifted their interests further afield.20 But Russia continued to be a major sector for capitalist development, and several of the most successful merchant houses promoted investment groups there. The most diversified of these was probably Wogau & Co., whose structure was so complicated by 1914 that it seems best to represent it in a diagram. The firm was founded in Moscow in 1839 by M. M. Wogau of Frankfurt, and the London branch was opened by his partner E. A. Schumacher in 1865. In its early years the firm was largely interested, it seems, in the trade in tea, sugar, cotton and other commodities of international trade, but in the last quarter of the century it joined the vanguard of Russian industrialisation by investment in a remarkable range of industries, including sugar refining, paper milling, metals, chemicals and building materials. In 1914 the concern in all its diverse activities was still run entirely by the descendants of the founders, but a large part of the capital consisted of deposits left in the business by relatives at 6 per cent interest. The London branch had now evolved to the status of a leading merchant bank with a capital of about £ r o m . , a median figure for accepting houses whose bills were regarded as first class.21 However, the largest investment group active in Russia was undoubtedly that built up by Ludwig Knoop, 'the Arkwright of Russia' (Chapter 7). Knoop came from Bremen but began his career with De Jersey & Co., a Manchester firm that specialised in the export of yarns and (later) machinery to Russia. When they went bankrupt in 1847, Knoop effectively took over the organisation along with the Russian agency for Platt Bros., the textile machine builders. Most of his enterprise was focussed on building, equipping and managing cotton mills in Russia, but he was also active in the cotton trade with the US and in banking. It is said that Knoop was 19 20

21

Ch. 5, above. Eg. Ralli Bros, to India, Kessler to the USA, Reiss Bros, to Indonesia. Further examples are given in the author's 'International Houses'. Capital of accepting houses in S. D. Chapman, Merchant Banking p. 55.

245

246

Response to instant communication

instrumental in setting up some 122 spinning concerns in Russia by the 1890s, and that at the end of the century the Knoop family were on the boards of ten manufacturing companies and in addition held shares in another fifteen undertakings. The house's capital in 1914 was £i*2m. but an attempt to embrace all their interests in one concern envisaged a capital of £8#om. Wogaus and Knoops were the pacemakers, but a number of other firms evidently had comparable interests, albeit on a more modest scale. Brandts, best known in London as merchant bankers, had interests in sugar and cotton mills as well as shipping and a meat refrigeration plant in Argentina. Hubbards, one of the few survivors of the old Anglo-Russian merchants, were also interested in cotton mills, forestry and other ventures. The Russian petroleum and mining industries attracted a good deal of West European capital in the first decade of this century, but to maintain a balanced view, it should be added that this was more often raised by financial syndicates.22 The Anglo-Russian grain trade was originally in the hands of Greek firms with offices in London, such as the Rallis, Rodocanachis, Scaramangas and Negropontis, but in the second half of the last century their leadership in this sector flagged. In Merchants of Grain (1979), Dan Morgan suggests this was because Dreyfus and other Jewish merchants had easier access to the capital required for warehouses, docks and ships to conduct the fast-growing trade. This is not convincing because the leading Greek houses were much richer than the firms that superseded them: by the turn of the century Rallis had a capital of £4*2111. in the Far Eastern trade. However, the only clear evidence of a Greek firm creating an investment group in Russia refers to Rodocanachis who ran cotton spinning and weaving factories, a flour mill, brewery, pottery, wire factory and steamship company. The explanation for the change of course by the Greeks seems to be the rise ofJewish middlemen in the Russian grain trade who built a closer relationship with their co-religionists. SOUTH AFRICA

At first glance the South African mining investment groups may appear an entirely different species to those considered in the Far East, South America and Russia, but on closer inspection there are 22

For British examples of such syndicates see eg. Gibbs MSS 11,117, 'Overseas Mining', Ch. 5.

an
75> 87, 93, n o , 112, 115, 124, 146, 152, 161, 165, 195, 196, 200, 208, 212, 216, 217, 226, 254, 262, 288, 292, 297, 298 Baring, Sir Francis, 29, 56 Barker, F. W., 271 Barker, John & Co, 186 Barlow & Co., 271 Barlow & Whittenbury, 59 Barnato Bros., 247, 248, 249, 256, 261, 276, 278, 279 Barrett, W., 150 Barrick & Simon, 135 Barton, Henry and James (& Co.), 59, 90, 91, 95-6, 174 Bates, Joshua, 75, 152, 289 Batesville Cotton Mill Co., 97 Baumeister & Co., 96 Baver, Abraham & Co., 148 Begg, Dunlop & Co., 270 Behn, Meyer & Co., 126 Behrens, Jacob and Louis, 143, 144, 149 Beit, Alfred, 248, 276, 277, 278, 279, 280 Bengal Coal Co., 113 Bengal Docking Co., 113 Bengal Salt Co., 113 Bengal Tea Association, 113 Benson family (Liverpool), 82, 93, 94, 95, 104, 210 Bergeron, Prof. Louis, 31, 132 Bethmann Bros., 45 Binny & Co., 119, 127, 240, 250, 254, 259, 267, 268, 290

323

324

Index

Bird & Co., 119, 120, 124, 125, 126, 253, 270, 272, 290 Birley & Hornby, 90, 91 Birkin, Richard & Co., 179 Bischoffsheim, L. R., 145 Black Ball Line, 85, 86, 88 Blackwell Hall, 41, 168, 169 Blaine, MacDonald & Co., 275 Bleichroder, Gerson, 212 Blessig, Braun & Co., 203-4, 205, 207 Bliss, Geo. & Co., 194 Bolton, Ogden & Co., 74, 104, 152 Bombay-Burma Trading Co., 124, 127, 240 Bombay Iron & Steel Co., 121 Booth family, 210 Borneo Company, 118, 124, 126, 240 Borthwick & Co., 209 Bosanquet family, 31 Bott & Co., 59 Boulton & Watt, 135, 152 Boustead, E. & Co., 108, 126, 147, 148, 225, 255, 258, 271, 306 Boustead, Schwabe & Co., 148 Bowring & Co., 209, 210, 291 Bowring, Sir John, 175 Boyd,J. & C , 182 Bradbury, Greatorex & Co., 179, 182, 189, 291, 316 Bradbury, John, 63 Braithwaite family, 94 Brandt, E. H., 134, 135, 203, 204, 205, 207, 212, 246, 255, 260, 291, 292, 317 Braudel, Fernand (cited), 11, 21, 29, 35, 39 Brenier (bank), 215 Brettle, George & Co., 182 Briscoe, William & Son, 73 British & Chinese Corporation, 239, 250 British Linen Bank, 213 Brocklebank family, 82 Brooks, John, 102 Brown Brothers (& Co.), 88, 93, 96, 105, 106, 146, 152, 161 Brown, Shipley & Co., 70, 74, 82, 151, 288, 290 Brown, William, 151, 153 Brown, W. & J. (& Co.), 73, 74, 86, 88, 89, 91, 104, 150, 151, 153 Bryce, James, 250 Buchanan, Ben, 105 Buck, N. S., 149 Bunge & Born, 205, 206, 207, 208, 209, 211, 228, 291, 292, 299, 303, 318 Bunge & Co., 255, 259 Bunge, Edward, 206 Burma Oil Co., 126

Butler, Sykes & Co., 148 Butterfield & Swire, 239, 250, 255, 258 Butterworth & Brooks, 90, 102, 103 Butterworth, Henry, 102 Cababe, Paul and Peter, 156, 157 Cable, Sir Ernest, 120, 253, 272

Cain, Dr P.J., 8, 9 Calcutta Chamber of Commerce, 120 Caldecott, Sons & Co., 182 Calico Printers Association (C.P.A ), 181, 183, 201, 233 Campbell, R., 25 Capital & Counties Bank, 215 Cardwell, Birley & Hornby, 103 Carlowitz & Co., 266 Carol I, King, 206 Carr, Robert & Co., 29, 49 Carr, Tagore & Co., 108, 112, 113 Cartwright & Warner, 188 Cassavetti Brothers & Co. (Cassavetti, Cavafy & Co.), 156, 158 Casson, Prof. Mark, 11,12 Catto, Sir Thomas, 120 Cavafy brothers, 156 Chadwick, James & Brother, 66 Chalmers, Guthrie & Co., 209, 210, 217 Champdany Co. (jute mill), 213, 221, 222 Chance, Edward, 73 Chance, William, 73 Chandler, Prof. A. D., 251 Charlton, Prof. K., 104 Chartered Bank of India, 213, 214 Clayton family, 63 Clydesdale Bank, 213 Coats, J. & P. (.& Co.), 181, 183, 230 Cockerell, Laing & Co. (also Cockerell, Larpent & Co.), 109, 112, 240 Cohen, Levy Barent, 34 Cohen, Louis, 277 Collmann & Stellefeht, 106 Colonial Bank, 215 Colvin & Co., 111 Consolidated Gold Fields, 247, 278, 279 Cooke & Comer, 87 Cooke, Isaac & Co., 87, 88, 105 Cooke, Son & Co., 168, 178, 182, 183, 186, 188, 201, 290, 293, 300 Copestake, Crampton & Co., 177, 182 Copestake, Moore & Co., 177, 189 Corn Exchange, Mark Lane, London, 76 Cottrell, Prof. P. L., 210 Courtaulds, 230 Cramond, James, 64 Crary, Craig & Co., 105, 106

Index Crawshay (ironfounder), 74 Credit Lyonnais, 212 Crocker, Sons & Co., 182 Crofts, William, 177 Cropper, Benson & Co., 73, 84, 85, 86, 87, 88, 89, 92, 95, 104, 106 Cropper, James, 87, 88 Cruttenden & Co., 111 Cumberbatch & Co., 271 Cunliffe, Brooks & Co., 102, 159 Cunliffe Bros., 214 Cunliffe, James, 159 Czarnikow, Caesar & Co., 77, 210, 290, 298 Dacca Twist Co., 189 Da Costa (Consul), 165 Daintry, Ryle & Co., 59 Dale, David, 62 Dalgety, F. C , 219, 220, 223, 292, 299, 300 Darbys of Coalbrookdale, 94, 95 De Beers, 225, 247, 248, 253, 256, 260, 276 Debenham, Frank, 186, 187 Defoe, Daniel, 44, 167, 168 De Jersey & Co., 195, 226, 245 Dennistoun, Cross & Co., 197, 209 Dennistoun, James, 88, 90, 91 Dennistoun, Mackie & Co., 88, 91 Dent, Allcroft & Co., 182, 188, 300 Devas, Routledge & Co., 182 Devine, Dr T. M., 38, 39 Dewar, Sons & Co. Ltd., 182 Dickinson, Thomas & Co., 73 Dietz, Alexander, 139 Dillon, John, 176 Discontogesellschaft, 215 Dixon, Henry & Co., 105 Dixon, Thomas & Co., 152 Dockray family, 94 Dodwell & Co., 126 Donaldson, Glenny & May, 135 Doner, Conrad, 135 Dreyfus, Louis & Co., 205, 206, 207, 208, 209, 211, 212, 228, 246, 255, 259, 299, Drinkwater, Peter, 58, 59, 62 Drysdale, Thomas & Co., 209, 210 Du Fay, Colin & Co., 70, 91, 134, 145, 147 Dugdale, John, 148 Dun & Bradstreet, 97, 216 Duncan, John and Peter, 173 Duncan, McLachlan & Co., 109, 119, 270, 290 Dunkelsbuhler, Anton, 276 Earle, Dr Peter, 26, 27, 29

325

East India Company, 33, 34, 36, 53, 70, 77, 83, 95, 101, 107, 109, i n , 112, 235, 280, 303 Eccles, Alexander, 197 Eckstein, F. & Co., 223, 278, 299 Eckstein, Herman, 250 Edwards, Michael, 75, 171 Egerton, Hubbard & Co., 203, 204, 207 Engels, F., 146 Erlanger, Emile & Co., 276, 277, 279, 280 Evans, David & Co., 182, 188 Evans, D. H. & Co., 186 Ewart & Rutson, 76 Ewing, James & Co., 114, 222 Ewo Bank of Peking, 237, 238 Exploration Co., 277 Farrar, George, 278, 279 Fergusson & Co., 111 Fielden Bros., 66, 67, 68, 72, 90, 103, 146, 291, 304, 318 Fielding, Sir William, 174 Fine Spinners & Doublers, 181 Finlay, Hodgson & Co., 73, 96, 104 Finlay, James & Co., 10, 55, 63, 86, 89, 90, 91, 95, 105, 117, 119, 120, 153, 164, 196, 212, 213, 214, 221, 222, 224, 225, 239, 240, 255, 257, 267, 268, 270, 271, 272, 290, 291, 295, 298, 299, 300, 301, 303, 3*3 Finlay, Kirkman, 95, 96, 104 Finlay, Muir & Co., 108, 212 Fish & Grennill, 105 Fisher, James & Co., 176, 177, 179 Flersheim, Soloman, 146 Flints (haberdashers), 175 Forbes & Co., 119 Foster, Joseph, 95 Foster, Porter & Co., 182, 291, 316 Franghiadi & Rodocanachi, 160 Frangopulo, N. S. & Co., 157 Fraser, George, Son & Co., 89 Fraser, John & Co., 96, 97 Fraser, Trenholm & Co., 96, 97 Friedlander, Isaac, 207 Fruhling & Goschen, 134, 214, 215 Fiirstenbank, 143 Fyffes, 209 Gardner, Robert (& Co.), 90, 102, 104, 164, 174 Garside, Alston Hill, 202 Gibbs, Antony & Sons, 72, 102, 164, 241-2, 243, 250, 253, 255, 259 Gibbs, Vicary, 241, 242

326

Index

Gilfillan, Wood & Co., 126 Gillanders, Arbuthnot & Co., 116, 117, 118, 270 Gilpin, Joshua, 61 Gisborne & Co., 84, n o , 112 Gisborne, Matthew, 84, 85 Gisborne, Menzies & Co., 85, 92 Gladstone, Henry Neville, 240 Gladstone (Sir) John (& Co.), 82, 84, 89, 90, 103, 113, 116, 146, 222 Gladstone, Robert, 84 Gladstone, Stuart, 301 Gladstone, W. E., 189, 288 Gladstone, Wylie & Co., 298 Goerz, A., 278, 279 Goldsborough, Mort & Co., 299 Goldsmid, B. A. & Co., 56 Goldsmid & Eliason, 135 Goodlive & Co., 150 Gott, Benjamin, 59, 62, 67, 91 Grace, W. R. & Co., 291, 292, 299, 318 Greaves, Cotton & Co., 119, 222, 267, 268, 269, 308 Greenburg, M. 113 Greg, Samuel (& Co.), 55, 60, 62, 64, 94 Greg, Thomas, 64 Griffiths, Sir Percy, 250 Groucock, Copestake & Moore, 177 Guistiniani & Nepoti, 156 Guthrie & Co., 108, 126, 240, 255, 258, 271, 272 Hagarty & Jardine, 106 Hagues, Cooke & Wormald, 152 Haigh, Joseph, 59 Hambro, C. J. & Son, 134 Hannah, Leslie, 252 Hardcastle, James & Co., 63 Hardy, Nathan & Sons, 215 Hargreaves, Dugdale & Co., 148 Harris, William, 202, 204 Harrison, Ansley & Co., 53 Harrisons & Crossfield, 209, 210, 241, 253, 255, 258, 271, 291, 314 Harrods, 186 Haworth, Richard, 174 Hayne Bros., 172 Heathcoat, John, 177 Heaton, H. 104 Heilbut, Symons Co., 209, 210, 212, 291, 3J5 Heilgers, F. W. & Co., 125, 270 Helbert, Wagg & Co., 279 Henderson, R. & J., 108, 118, 124, 240, 255, 258

Henry, Alexander, 151, 152, 153 Henry, A. & S., 96, 150, 151, 152, 174, 182, 201, 288, 293 Henry, Mitchell, 153 Henry, Thomas & William, 152 Heylin, H. B., 185, 198 Heymann, Louis, 149 Heywood & Palfreyman, 63, 64 Hibbert, Titus & Son, 64 Hills & Whishaw, 203, 204 Hirsch, L. & Co., 277, 278 Hitchcock, Williams & Co., 189, 293, 296 Hodgson, James, 71, 72 Hodgson & Robinson, 71, 72 Hohenemser family, 143 Hollenden, Lord, 190 Hollins, Sir Frank, 188, 304 Holt family, 210 Holywell Co. (Chester), 63 Hong Kong Fire Insurance Co., 238, 239 Hong Kong & Shanghai Bank, 239 Hope & Co., 87, 88, 165 Hope, Henry, 53 Hopkins, Prof. A., 8, 9 Hoppit, Dr J., 47, 48, 50, 311 Hornby & Co., 103 Horrocks, Miller & Co., 55, 90, 101, 103, 188, 200, 291, 304, 305, 318 Horstman & Co., 215 Horwitz & Meyer, 144 Hottinguer et Cie, 87 Howard & Bullough, 269 Hubbard, J. & Co., 246, 250, 255, 260, 301 Hunt, Wallis, 243 Huth, Frederick & Co., 70, 87, 134, 135, 139, 141, 147, 161, 213, 214 Hyde, R. & N., 60, 64 Imperial Tobacco Co., 233 India Jute Mills, 124 Indo-China Steam Navigation Co., 237-9 Indo-Java Rubber Planting & Trading Co., 240 Innis, John, n o International Bank of London Ltd., 214 Ionides, Alexander, 160 Ionides Bank of London, 160 Ionides, John & Constantine (Bros. & Co.), 154, 157, 158, 160 Ionides, Sgouta & Co. 158 Ironside, W. A., 125 Jackson, Sir William, 103, 210 Jardine, David, 114, 115, 116, 118 Jardine, Matheson & Co., 102, 114, 115,

Index 126, 153, 164, 217, 226, 237, 238, 239, 250, 266, 267, 270, 272, 290, 291, 293, 294, 298, 313 Jardine, Sir Robert, 294 Jardine, Skinner & Co., 99, 114, 115, 116, 117, 118, 120, 123, 124, 125, 226, 237, 250, 254, 258, 267, 270, 300 Jardine Spinning & Weaving Co., 238, 239 Jenkins, Dr D. T., 266 Johnstone's Commercial Guide, 171 Jones, Dr Charles, 12, 223, 279 Joseph Bros., 276 Jowett, Thomas & Co., 152 Justamond, John, 141 Kawakatsu, Dr H. 264 Kelsall & Co., 102 Kennaway family, 61 Kennedy & Co., 271 Kessler, J. P., 202 Keswick, James, 226 Keswick, William, 250, 272 Ketland, Cotterill & Son, 61 Killick, John R., 93, 104 Killick, Nixon & Co., 119, 270 King & Gracie, 88 King, Gregory, 22 King, H.J., 276 Kiyokawa, Prof. T., 268 Kleinwort, Sons & Co., 78, 87, 215, 217, 218, 226, 254, 280, 298 Kling, B., 108 Knoop, Julius, 195 Knoop, Ludwig & Co., 195, 225, 226, 245, 246, 256, 260, 290, 298 Knowles & Foster, 243, 255, 259 Koike, Kenji, 269, 270, 271 Kruger, President, 277, 280 Labouchere, P. C , 165 Ladenburg & Co., 212 Lampard, Arthur, 241 Larpent, George, 109, n o Leaf, Sons & Co., 178, 179, 180, 182, 185, 189, 218, 219, 293, 317 Leaf, Walter, 180, 186, 187, 218, 219 Lee, Clive, 1 Leech, John, 90 Lehmann Bros., 216 Leopold II, King, 206 Levitt, Sarah, 179 Liberty & Co., 186 Liebert & Co., 147 Liepmann, Lindon & Co., 91, 145, 147 Lilienfeld Brothers, 275

327

Lindert, P. H., 24 Lippert, Edward, 273, 274, 275, 276, 277 Littledale, T. and H. & Co., 104 Liverpool, Lord, 69 Liverpool North Shore Mill Co., 208 Liverpool Union Bank, 212 Livesey, Hargreaves & Co., 52, 53 Lizardi, Francisco de & Co., 71, 161, 166 Lloyd, Scott & Co., 108 Lloyds (insurance market), 16, 36, 95, 212, Lodge, Edmund & Sons, 59 Lokanathan, P. S., 307 Lombe, John, 37, 38 Lombe, Sir Thomas, 37, 38 London Assurance Co., 31 London Chamber of Commerce, 189 London, City and Midland Bank, 213 London Commercial Sale Room, 76 London Produce Clearing House, 78 London & River Plate Bank, 206 London Stock Exchange, 124, 125, 305 London Warehouse Co., 179, 182 Louis-Dreyfus, Leopold, 204 Liithy, Herbert, 32, 130 Lyle & Scott, 188 McFadden Inc., 197, 198, 303 MacGregor, Alex & Co., 105 Mclntyre, Donald, 109 Mackay, Sir James, 272 Mackie, Harvey & Co., 96 Mackie, Milne & Co., 96 Mackinnon, Mackenzie & Co., 108, 119, 124, 240, 255, 258, 272 Mackintosh & Co., i n MacLeod, Dr C , 58, 270 MacNeill, Barry & Co., 119, 270 Macvicar, John, 102 Magniac, Jardine & Co., 116, 294 Malcomess & Co., 275 Mana, P. & Co., 157 Manchester Royal Exchange, 16, 304 Marcuard, Krauss & Co., 215 Markland, Cookson & Fawcett, 59 Marks & Spencer, 170 Marshall, Benjamin, 85 Marsland, Samuel & Co., 148 Martin, Burn & Co., 119, 121, 269, 270 Martineau, Smith & Co., 105 Massie, Joseph, 22 Matheson & Co., 108, 114, 115, 124, 237, 238, 239, 240, 247, 250, 254, 257, 294, 3r3 Matheson, Hugh, 114

328

Index

Matheson & Scott, 113, 114 Matley & Sons, 63 Maury, Latham & Co., 73, 105 Maxwell, W. & G., 73 Meason, M. R. L., 159 Meinertzhagen, Daniel, 138, 139 Menzies, Henry, 92 Merchant Banking Co., 213, 214 Merck, H. J., 134 Meyer, Sir Carl, 253 Micrulachi & Co., 158 Midland Bank, 160 Midland Hosiery Co., 179 Milford family, 61 Milnes & Travis, 148 Mocatta & Goldsmid, 279 Moore, George, 177, 189 Moore, Hard wick & Co., 89 Morgan, Dan, 211, 246 Morgan, Grenfell & Co., 225, 237, 254 Morley, I. & R., 168, 177, 179, 182, 183, 184, 186, 188,189,190, 201,290, 293,300 Morley, Samuel, MP, 187, 189, 296, 297 Morrison, Cryder & Co., 161 Morrison, Dillon & Co., 175, 176, 177, 179, 180, 218, 219, 293 Morrison, James, 70, 151, 168, 175, 176, 177, 178, 183, 185, 186, 293 Mortimer, John, 22, 23, 26, 30, 61, 71 Mosenthal Bros. (& Co.), 213, 273, 274, 257, 276, 279, 290, 299 Muir, Duckworth & Co., 197 Muir, Sir John, 221, 222, 224, 239, 272 Mundella, A. J., 179 Munro, H. Milne & Co., 96 Muntz, Philip Henry, 144 Nash & Co., 28 National Bank of India, 213, 214 Negroponti & Co., 246 Neufeld & Co., 206 Neuhaus & Sieskind, 204 Neumann, Lubeck & Co., 217, 249, 256, 261, 278 Neumann, Sigismund, 276, 277, 279, 280 Neville & Co., 179 Newbury, Colin, 253 Newgas, Benjamin, 216, 217 Nicholas, S. J., 14, 16, 17, 198, 305 Nolte, Vincent, 87, 88 Nottingham Manufacturing Co. (N.M.C.), 183 Ogilvy, Gillanders & Co., 113, 116, 222, 240, 254, 257, 291, 301, 314 O'Hagan, H. O., 297

Oldknow, Samuel, 170 Oppenheim & Liepmann, 134, 135, 145 Overend, Gurney & Co., 70, 160 Owen, John, 72 Owen Owen & Son, 72, 89, 90 Owen, Robert, 58, 59 Pacific Loan & Investment Co., 242 Palmer, John & Co., i n , 112, 235, 254, 257 Palmerston, Lord, 98, 99, 100, 161, 229, 289 Panchaud family, 31 Pares & Co., 105 Parker, J. & J. & Co., 59 Parry & Co., 118, 119, 226 Paterson & Co., 126 Pawson, J. F., 179 Pawsons & Co., 179, 180, 182, 293, 317 Pawsons & Leaf, 291, 293, 317 Paxton, Cockerell, Trail & Co., 235 Peabody, George, 150 Peck & Phelps, 105, 150 Peel, Robert & Sons, 52, 53, 60, 84, 141, 157, 173 Pennefather & Mills, 228 Perkins, E. J., 104 Phelps, Dodge & Co., 105 Philips, Cramond & Co., 64, 65 Philips, J. & N. & Co., 55, 60, 64, 65, 66 Phillips, Laurence & Sons, 113 Pitt, William, 29 Planters' Stores & Agency Co., 290 Platt Bros., 237, 245, 269 Platt, Prof. D. C. M., 13, 14. 262, 274, 279, 281, 292 Pontz, Victor, 106 Porges, Jules & Co., 247, 276 Price, Prof. Jacob, 26, 41, 45 Prime, Ward & Sands, 88 Prioleau, C. K., 97 Puseley, Daniel, 176, 177 Radcliffe, William, 60, 63 Rainsdon & Booth, 106 Ralli & Agelasto, 155 Ralli Bros., 119, 120, 128, 154, 155, 157, 158, 160, 204, 205, 206, 211, 218, 224, 225, 228, 246, 255, 259, 288, 290, 291, 292, 293, 294, 295, 299, 302, 314 Ralli & Co., 155, 158 Ralli, E., 155 Ralli, Freres, 155 Ralli, John, 154, 155 Ralli, J. E., 155

156, 212, 281, 298,

Index Ralli & Maviojani, 158 Ralli, Pandias, 160 Ralli, P. T., 158 Ralli & Scaramanga, 155 Ralli, Schilizzi & Argenti, 155 Ralli, Stephen, 155, 160, 224, 288, 289, 293 Rand Mines Ltd., 248, 250 Rank, Joseph & Co., 211 Rathbone (Brothers) & Co., 74, 82, 86, 87, 88, 93, 95, 103, 104, 106 Rathbone, Hodgson & Co., 84 Rathbone, William I, 94 Rathbone, William II, 94 Rathbone, William III, 93, 94, 295 Rathbone, William IV, 83, 94, 296 Rathbone, William V, 94, 296 Reid, Irving & Co., 113 Reiss Bros., 91, 134, 145, 147, 148 Reynolds, Richard, 94, 95 Rhodes, Cecil, 225, 247, 248, 251, 276, 277, 278, 279, 282 Rhodesia Exploration Co., 277 Rindskopf, N. M., 134 Rio Flour Mills, 243, 306 Rio Tinto Mines, 237, 247 Ritchie, Steuart & Co., 95, 96 Robinson, J. B., 247, 249, 256, 261, 277, 278, 279, 290 Rocca Brothers, 156 Rodocanachi, Sons & Co., 155, 157, 158, 160, 204, 205, 207, 212, 246, 256, 260, 291, 292, 315 Rogers, Lewis & Co., 150 Rossetto, Carati & Co., 158 Rothenstein, Moritz, 143 Rothschild, N. M., 34, 133, 134, 135-6, i37> J39> H3> !46> 148, 253, 289, 295 Rothschild, N. M. & Co., 56, 70, 71, 74, 78, 141, 143, 146, 158, 163, 225, 249, 253. 254, 279, 295 Rougement & Behrens, 135 Royal Bank of Scotland, 212, 213, 214 Rubenstein, W. D., 2 Rudd, C. D., 247, 276, 278, 290 Ruffer, A. & Sons, 14 Rungta, R. S., 126-7 Russian Collieries Co., 240 Rutnagur, S. M., 268, 302 Rylands, John & Co. (previously & Sons), 90, 168, 170, 174, 179, 182, 183, 184, 187, 188, 189, 190, 200, 201, 290, 291, 292, 293, 296, 297, 299, 300, 305, 317 Saalfeld, A. J. & Co., 144, 147, 148, 149 Samuel, Marcus, 209, 210, 241, 255, 258, 290

329

Sanday, S. & Co., 204, 205, 207, 208, 211, 228 Sands, Hodgson & Co., 73, 105 Sands, Spooner & Co., 105 Sassoon, David & Co., 217, 218, 223, 253, 254, 267, 281, 290 Sassoon, E. D. & Co., 240, 257 Scaramanga & Co., 155, 160, 204, 207, 246 Scaramanga, Manoussi & Co., 155 Scaramanga, S. E., 155 Schilizzi & Co., 158 Schroder & Co., 78, 87, 93, 134, 143, 161, 163, 214, 254 Schroder, J. F., 135 Schroder, J. H., 147 Schumamer, E. A., 245 Schunk, Souchay & Co., 91, 144, 145, 148, 290 Schuster Bros. & Co., 103 Schuster, Leo, 146 Schwabe, Salis & Co., 148 Schwabe & Sons, 147 Schwann, Frederick, 91, 144, 145 Seligman Bros., 213 Seligman, J. & Co., 96, 194 Sen, A. K., 309 Seyd, Richard, 311 Sharp, Stewart & Co., 194 Shaw, Charles & James, 73 Shaw, Gabriel, 101 Shaw, Wallace & Co., 119, 270, 290 Sheffield, Lord, 52 Shell Transport & Trading Co., 241 Sichel, A. S., 147 Sime, Darby & Co., 271 Simon & Co., 126 Simon, Meyer & Co. (Simon May), 214, 215 Singer & Friedlander, 278 Skinner, C. B., 114, 117 Skinner, J. S., 120 Smiles, Samuel, 177 Smith, Edwards & Co., 10, 196, 197 Smith, J. B., 143, 144 Smith, Samuel, 10, 196, 197, 198, 295, 312 Smith, Vivian Hugh, 237 Smith, Walker & Co., 73 Smyth, H. L., 208 Smyth, Ross T., 204, 205, 207, 208, 211, 228, 291, 296, 303, 315 Solomans, Soloman, 135 Souchay family, 70, 134, 135, 148, 163 South Sea Company, 33, 34 Sparling & Bolden, 61 Spartali & Co., 157 Spartali & Lascardi, 158

330

Index

Spencer, Reuben, 187, 189 Springmann, Emil, 143 Sprunt, Alexander & Co., 197, 198, 299, 3O3 Standard Chartered Bank, 249, 274, 275, 280, 282, 307 Steam Tug Association, 113 Steel Bros., 108, 119, 126, 127, 269, 270, 3O3 Steel, Murray & Co., 213 Steiner, F. & Co., 201 Stern, A. & Co., 197 Stewart, Alexander Turney, 194, 288 Stewart, John, 123 Stock Exchange, 241, 251 Stone, Lawrence, 36 Stopford, J. M., 14, 305 Stuart, John & James (Bros.), 96, 194 Sugar Factories of Brazil Ltd., 306 Sugihara, Dr K., 263, 266 Swan & Buckley, 137 Swire, John & Sons, 108, 126, 239, 267, 290, 291, 314 Swiss Bankverein, 215 Sykes, Schwabe & Co., 147, 148 Syme, Darby & Co., 108 Tarratt, Joseph & Son, 73 Tastet, Firmin de, 135, 152 Tata & Co., 269, 270, 281, 300, 311 Tayleur, Charles & Sons, 91 Tayleur, Son & Co., 105 Taylor, J. & Sons, 197 Taylor & Maxwell, 140, 141 Teich Brothers, 275 Thomas, F. M., 259 Thompson, F. M. L., 36 Thompson, Francis, 85, 88 Thompson, Jeremiah, 85, 88, 95, 104 Thorneley, T. & J. D., 105 Thornton, Atterbury & Co., 89, 96, 150 Thornton, Henry, 42 Thurn, J. C. im, 215 Todd, Morrison & Co., 151, 175, 189, 317 Tomlinson, Dr B. R., 13 Tootal, Broadhurst, Lee & Co., 181, 183, 200, 305 Trenholm Bros. & Co., 97 Trenholm, George A. & Co., 97-8 Tripathi, A., 108 Troost, Abraham & Sons, 147 Uhde, William, 140, 141 Union National Bank, 217 US Federal Trade Commission, 208

Van Neck family, 34 Vestey Bros., 209, 210, 292 Volkart Bros., 266 Wainwright & Shiels, 105, 106 Wakefield family, 94, 95 Walker, John, 73 Wallace Bros., 108, 118, 119, 120, 124, 126, 127, 209, 210, 240, 250, 254, 257, 295, 303 Wallis, Thos. & Co., 186 Ward, Sturt & Sharp, 182 Waterhouse, Nicholas (& Co.), 77, 87, 106 Watson Bros. & Co., 104, 120 Watson, J. & R., 120 Watts, S. & J., 174 Weber, Max, 43 Webster, Steel & Co., 214, 224 Wechslerbank (Hamburg), 215 Welch, Margetson & Co., 179, 182, 188, 189 Weld, Albrecht & Co., 197, 198, 228 Wells, Heathfield & Co., 59 Wernher, Beit & Co., 223, 248, 250, 256, 260, 276, 277, 278, 279, 299 Wernher, Julius, 276 Westerfield, R. B., 168 Whittal & Co., 271 Wholesale Textile Association, 190 Wichelhaus, 143

Wiener, Martin J., 7, 8 Wiggin, Timothy (& Co.), 70, 161 Wildes, Pickersgill & Co., 67, 68, 70, 103 Wilkins, Prof. Mira, 305, 306 Williams Deacons Bank, 213 Williams, Sir George, 189, 296, 297 Williams, Wilson & Co., 197 Williamson, J. G., 24 Williamson, Magor & Co., 270 Willink, Daniel, 87, 88, 165 Wilson, Prof. Charles, 57, 62 Wilson, Dr R. G., 24, 37, 57, 58, 70 Wilson, Thomas (& Co.), 70, 73 Wogau & Co., 244, 245, 246, 255, 260, 290, 291, 292, 298, 316 Wolsey Ltd., 183, 188 Wood & Wright, 63 Worms, Benedikt, 134 Wright, Isaac & Sons, 85 Wright, Taylor & Co., 105, 106, 150 Yule, Andrew & Co. 119, 120, 125, 225, 236, 237, 260, 272, 290 Yule, Sir David, 120, 225, 237, 272 Zambesia Exploration Co., 277

Index of places

Accrington, 148, 201 Adrianople (Turkey), 100 Africa, 5, 6, 8, 23, 107, 108, 157, 201, 247, 248

Aleppo, 156 Alexandria, 145, 154, 156, 197 Altona, 135 Amsterdam, 11, 29, 31, 32, 33, 34, 42, 49, 53, 56, 64, 87, 130, 134, 154, 165, 205, 287, 318 Anatolia, 154 Anglesey, 205, 206, 291, 292 Archangel, 205, 255, 317 Ardwick, 202, 203, 204, 205, 206, 207, 208, 211, 212, 228, 246, 251, 299 Asia, 6, 8, 81, 154, 263, 264, 265 Asia Minor, 243 Augusta, 197 Australasia, 6, 8, 90, 107, 147, 223, 233, 241, 242, 262, 299 Austria-Hungary, 5, 180 Bahia Blanco, 89 Balkans, 203, 205, 206, 208 Baltimore, 104, 151 Bamber Bridge, 63 Bank Bridge (Manchester), 63 Barnsley, 49 Basle, 32, 205 Beirut, 100, 157 Belfast, 152, 162, 194 Belgium, 4, 5, 139, 146, 206 Berdyansk (Ukraine), 156 Berlin, 91, 131, 134, 135, 142, 145, 147, 248 Berne, 130 Bevis Marks (Synagogue), 30, 33 Birmingham, 61, 70, 72, 73, 74, 95, 100, 136, 138, 144, 151, 162, 163, 200 Blackburn, 102, 195 Bombay, 83, 85, 92, 95, 96, 114, 155, 221, 254, 255, 265, 267, 268, 273

Bordeaux, 33 Borneo, 108 Boston, Massachusetts, 60, 100, 152, 197 Brabant, 48 Bradford, 100, 137, 138, 140, 143, 144, 146, 147, 148, 152, 161, 181, 289 Brazil, 33, 83, 102, 243, 305, 306 Bremen, 138, 140, 197, 198, 245 Bristol, 24, 25, 27, 35, 39, 40, 41, 42, 43, 44, 46, 68, 74, 81 Britain, 3, 4, 5, 7, 8, 12, 13, 21, 29, 30, 31, 32, 42, 47> 5J> 55? 6 2, 69, 71, 72, 96, 101, 130, 133, 135, 138, 139, 140, 141, 143, 144, 145, 149, 150, 151, 152, 153, 157, 158, 161, 163, 165, 166, 181, 190, 194, 195, 210, 211, 221, 223, 229, 231, 233, 235, 252, 263, 264, 269, 288, 289, 300, 307, 310, 311, 312 British Empire, 13, 14, 15, 292, 305 Bromley Hall (East London), 95 Brunswick, 133 Buenos Aires, 54, 67, 71, 74, 147, 161, 162, 206, 207, 255, 305 Burma, 108, 118, 126, 250, 271, 303 Cairo, 100, 156 Calais, 215 Calcutta, 83, 84, 102, 108, n o , 112, 114, 116, 117, 120, 121, 124, 125, 150, 152, 155, 197, 213, 221, 223, 224, 235, 237, 254, 255, 272, 302, 311, 313 California, 205, 207, 228, 242 Canada, 202, 203, 208, 306 Canton, 102, 150, 227, 254 Cape, see South Africa Cape Town, 274 Carolina, 23 Ceylon, 113, 201 Charleston, South Carolina, 88, 95, 96, 97, 98, 104, 153, 195 Chatham, 188

33 1

332 Cheadle, 66 Chester, 63 Chicago, 203 Chile, 162, 242 China, 6, 77, 99, 102, 108, n o , 114, 124, 126, 136, 145, 147, 164, 201, 218, 227, 233, 235, 237, 239, 241, 248, 251, 257, 262, 264, 265, 266, 267, 274, 280, 281, 282, 301, 305, 312 Chios, 154, 155 Coalbrookdale, 94, 95 Colne, 61 Congo, 206 Constantinople, 132, 154, 155, 156, 160 Cornwall, 3 Coventry, 180 Crayford, 188 Cumbria, 93 Cyprus, 100 Dallas, 197 Damascus, 156 Denmark, 23 Derby Silk Mill, 37 Devon, 40, 48, 57 Disley, Derbyshire, 95 Dublin, 49, 73, 189 Dundee, 118, 173, 271 Dusseldorf, 96 Dutch East Indies, 240 East Indies, 23, 40, 63, 82, 91 Egypt, 156, 157, 303 England, 22, 34, 37, 47, 48, 55, 58, 95, n o , 124, 129, 130, 135, 141, 142, 144, 157, 185, 204, 245, 250, 265, 289 English regions: East Anglia, 40 East Midlands, 171 Midlands, 3, 39 North, 3, 52, 89, 92, 93, 104, 109, 133, 151, 161, 182 North West, 2, 74 South East, 2, 8, 74 West Midlands, 2 Europe (Continent), 5, 6, 7, 8, 11, 21, 27, 31, 33, 40, 41, 53, 54, 64, 77, 81, 83, 88, 91, 95, 97, 99, 100, 107, 133, 136, 137, 138, 141, 144, 146, 147, 153, 155, 161, 163, 164, 165, 166, 189, 190, 195, 197, 198, 203, 206, 224, 243, 311 Exeter, 24, 27, 35, 40, 41, 49, 55, 70 Far East, 5, 6, 33, 55, 81, 90, 95, 107, 109, i n , 113, 126, 127, 131, 152, 161, 200,

Index 209, 225, 233, 235, 237-9, 240, 241, 246, 254, 257, 262, 263, 265, 266, 267, 272, 288, 291, 294, 301, 303, 310, 311, 312, Flanders, 23, 48 Florence, 129 Fort Worth, 197 France, 5, 7, 11, 23, 32, 55, 130, 139, 142, 151, 180, 186, 245 Frankfurt, 31, 32, 33, 45, 55, 60, 91, 130, 131, 132, 133, 134, 135, 136, 140, 141, 142, 144, 146, 147, 166, 229, 245 Garstang, 149 Gawsworth, 94 Geneva, 32, 130 Genoa, 147, 156 Germany, 4, 5, 7, n , 91, 100, 137, 139, 140, 141, 142, 143, 144, 155, 180, 193, 245, 288 Glasgow, 24, 26, 27, 28, 36, 38, 39, 41, 42, 49, 55, 61, 63, 76, 81, 82, 83, 84, 89, 90, 95, 96, 98, 104, 109, 112, 113, 114, 133, 134, 136, 137, 147, 148, 152, 153, 161, 162, 163, 167, 172, 181, 182, 189, 196, 220, 221, 224, 235, 266, 289, 293, 310, 313 Gloucestershire, 40 Greece, 63, 69, 142 Guinea, 82 Haarlem, 48 Haiti, 100 Halifax, 37, 41, 55, 57, 59, 61 Hamburg, 23, 31, 33, 55, 64, 96, 131, 132, !33> !34> !36> 138, i4°> i4i> 142, i43» 144, 145, 147, 149, 245, 273 Hawick, 188 Hawkshead, 94 Hesse-Cassel, 144 Hodge Mill (Mottram), 63 Holland, 5, 23, 30, 34, 48, 49, 139, 142, 146 Hong Kong, 13, 148, 237 Huddersfield, 37, 57, 91, 144, 145, 152 Hull, 24, 36, 40, 41, 43, 46, 82, 83, 84 Iberia, 30 India, 6, 7, 10, 13, 33, 40, 71, 77, 81, 82, 83, 84, 85, 90, 95, 99, 102, 107, 108, 109, n o , i n , 113, 115, 116, 118, 119, 121, 122, 123, 124, 125, 126, 130, 131, 134, 136, 147, 155, 158, 160, 161, 164, 189, 194, 198, 201, 202, 203, 204, 205, 208, 220, 221, 222, 224, 225, 228, 233, 235,

Index 236,239,240,241,247, 248,250,251, 257,262,263, 264, 265,266, 267,268, 269,270,272,273,274,280,281,282, 288,289,290, 292,295,299, 301, 302, 3°3, 3°5, 3°7, 3°8> 3°9, 3 1 1 , 3X2, 314 Indonesia, 206 Ireland, 3, 23, 48, 49 Italy, 11, 23, 30, 31, 142, 144, 146, 153, 180, 186 Japan, 11, 201, 263, 264, 265, 266, 267, 269, 288, 301, 309 Jassy, 156 Java, 108, 235 Johannesburg, 249, 256, 275, 277, 280, 311 Juliers, 48 Karachi, 155 Kendal, 61, 93, 94, 95 Keswick, 61 Kimberley, 247, 248, 249, 256, 274, 276, 277, 278, 280 Korea, 237 Lancashire, 2, 38, 42, 54, 55, 58, 69, 73, 101, 103, 109, 114, 118, 136, 141, 168, 171, 179, 196, 202, 265, 302 Latin America, 6, 8, 13, 14, 33, 69, 91, 98, 99, 100, 102, 134, 136, 139, 200, 214, 233, 241, 248, 259, 274, 279, 291, 292, 3O5> 315 Leeds, 24, 26, 27, 29, 35, 36, 37, 38, 41, 46, 49, 55, 57, 59, 61, 67, 70, 76, 89, 91, 137, 138, 145, 149, 150, 152, 167, 169, 172, 174, 181, 243 Leghorn, 154, 155, 156 Le Havre, 87, 150, 197, 198 Leicester, 171, 187 Leipzig, 31, 60, 131, 133, 140, 141, 142, 145, 153, 154 Levant, 27, 28, 31, 77, 153, 155, 159, 201 Liege, 134 Lille, 145 Lima, 72, 255 Little Longstone, Derbyshire, 60 Liverpool, 10, 24, 27, 28, 41, 42, 43, 46, 54, 61, 62, 67, 68, 70, 72, 73, 74, 75, 76, 77, 81, 82, 83, 84, 85, 86, 87, 89, 90, 93, 94, 95, 9^, 97, 98, 100, 103, 104, 105, 107, 112, 113, 143, 147, 148, 149, 151, 153, X 54, J55> X56, 157, 161, 162, 165, 166, 168, 181, 195, 196, 197, 198, 199, 202, 203, 204, 205, 208, 210, 220, 228, 289, 295, 298, 299, 309, 310, 314 London, 2, 3, 5, 8, 11, 15, 21, 24, 26, 27,

333 28, 29, 30, 31, 32, 33, 34, 36, 38, 39, 40, 41, 42, 43, 44, 45, 46, 48, 49, 52, 53, 54, 55, 61, 62, 64, 66, 68, 69, 70, 72, 73, 74, 75, 76, 77, 81, 82, 83, 84, 89, 91, 96, 97, 104, 113, 120, 121, 123, 124, 130, 131, J 33, !34, !35> ! 3 6 , r 37, 138, i39> H3, 144, 145, 146, 148, 149, 150, 151, 153, l 6 I6J J , 54, !55, J 5 6 , X 57, l5%> J 5 9 , °, 162, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 178, 179, 181, 182, 183, 186, 188, 189, 190, 195, 196, 199, 204, 205, 215, 220, 221, 223, 225, 226, 228, 229, 232, 235, 243, 246, 252, 253, 262, 266, 280, 281, 287, 289, 292, 293, 296, 297, 298, 300, 301, 309, 310, 312,

33 34 35 3 Londonderry, 188 Loughborough, 188 Lubeck, 140 Lyons, 163, 186

37

Macclesfield, 59 Madras, 83, 118, 226, 254, 267 Maine, 37 Malaya, 108, 126, 206, 237, 255, 308 Malaysia, 240, 269, 271 Malta, 154 Manchester, 12, 24, 27, 29, 36, 41, 42, 44, 46, 54, 55, 58, 59, 60, 61, 64, 65, 66, 69, 70, 7 1 , 75, 7 6 , 77, 81, 89, 90, 91, 92, 94, 96, 98, 100, 103, 104, 107, n o , 112, 114, J 33, i34> X35, J 3 6 , J 37, J 38, 139, J 4°, 141, 142, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 155, 156, 157, 159, 161, 162, 166, 167, 168, 169, 170, 171, 172, 173, 174, 181, 182, 183, 188, 190, 195, 199, 202, 226, 243, 287, 288, 289, 292, 293, 309, 310 Manila, i n , 147, 148, 235 Mansfield, 49, 61 Marseilles, 154, 155, 156, 157, 163 Maryland, 23, 39 Mauritius, 112, 113 Mediterranean, 99 Mellor (Stockport), 60, 63 Messina, 147 Mexico, 91, 100, 104, 105, 147 Middle East, 6, 99, 100, 155, 157, 165, 201, 288, 299 Milan, 145 Mobile, 100 Montevideo, 162 Moscow, 154, 245, 255, 256, 316 Nantes, 138

334

Index

Naples, 156 Netherlands, see Holland Neuchatel, 32 Nevis, 26 Newcastle, 24, 27, 41, 43, 46, 82, 83, 84 New England, 23 New Orleans, 71, 87, 88, 91, 95, 96, 104, 105, 150, 153, 155, 156, 162, 166, 195 New York, 67, 85, 86, 88, 95, 96, 97, 104, 105, 136, 139, 147, 150, 151, 152, 153, 155, 165, 185, 194, 195, 197, 198, 200, 203, 228, 229, 291, 292, 318 North America, 5, 6, 7, 8, 28, 38, 41, 42, 60, 62, 66, 68, 70, 72, 81, 88, 90, 95, 96, 98, 99, 107, 130, 136, 147, 164, 165, 190, 194, 201, 224, 262, 290, 299, 305, 311 Norwich, 55, 70 Nottingham, 138, 140, 147, 149, 151, 162, 167, 171, 172, 177, 179, 182, 187, 188, 194, 214, 293, 316 Nuremberg, 133 Odessa, 100, 154, 155, 156, 157, 158, 160, 204, 207, 226 Oldenburg, 148 Oldham, 148, 237 Oklahoma City, 197 Ottoman Empire, 153, 154, 157 Paisley, 137 Paris, 32, 130, 139, 166, 174, 189, 229, 248, 279, 305 Penang, 83 Pernambuco, 162 Persia, 108, 201 Peru, 242, 318 Philadelphia, 27, 41, 46, 52, 53, 60, 64, 65, 70, 86, 88, 95, 100, 136, 147, 151, 152, 162 Poland, 142 Portugal, 23, 31 Preston, 55, 90, 101, 102, 188, 200, 318 Prussia, 137 Rangoon, 201, 221 Rhodesia, 248 Richmond, Virginia, 150 Rio de Janeiro, 54, 89, 162, 174, 200, 255, 306 Rio Grande, 162 Rochdale, 61 Rome, 145 Rostov-on-Don, 155 Rotterdam, 49 Rumania, 203, 206

Russia, 4, 5, 14, 23, 27, 43, 90, 91, 100, 130, 134, 137, 141, 153, 158, 195, 202, 203, 205, 206, 207, 212, 214, 225, 226, 227, 233, 245, 246, 248, 251, 259, 260, 262, 291, 292, 301, 303, 315 St Etienne, 186 St Louis, 197 St Petersburg, 14, 60, 136, 145, 150, 155, 156, 204, 205, 227, 255, 256, 316 San Antonio, 197 Santiago, 72 San Salvador Railways, 217 Savannah, 88, 195, 197 Saxony, 142 Scotland, 39, 95, 118, 154, 312 Serampore, 125 Settle, 94 Shanghai, 148, 237, 255 Sheffield, 74, 100, 151, 162, 163 Siam, 108 Silesia, 48 Singapore, i n , 126, 147, 148, 225, 235, 255, 265, 272 Smyrna, 83, 154 South Africa, 13, 108, 147, 153, 209, 213, 225, 233, 234, 246, 247, 248, 250, 251, 253, 260, 262, 263, 272, 273, 274, 275, 277, 278, 279, 280, 281, 282, 288, 290, 2 99> 3°3> 3°6> 311, 312 South America, 90, 91, 101, 102, 103, 130, 131, 147, 148, 150, 164, 200, 206, 213, 228, 241, 242, 246, 305 South Wales, 38, 39 Spain, 23, 31, 241 Spitalfields, 171, 180 Staley Bridge, 90 Staveley, Derbyshire, 39 Stockport, 148 Styal, 60, 94 Suez Canal, 5, 118, 119 Sunderland, 41 Sweden, 23 Switzerland, 55, 180 Syria, 154 Tabriz, 155 Taganrog, 100, 154, 155 Tean, Staffs., 60, 64, 65 Thrace, 154 Threadneedle Street, 30 Todmorden, 67, 90, 103, 318 Trebizond, 155 Trieste, 154 Turkey, 23, 63, 82, 100, 142, 157

Index Tutbury, 59 Tyneside, 3

335

Ukraine, 158, 160, 206 United Kingdom, see also Britain, 5, 6, 11, 13, 83, 243, 304, 309 United States, 5, 6, 7, 11, 37, 52, 54, 61, 64, 69, 76, 82, 83, 84, 89, 90, 91, 98, 100, 102, 105, 130, 131, 134, 139, 147, 149, 150, 151, 152, 193, 194, 202, 203, 204, 205, 208, 212, 229, 242, 245, 250, 263, 265, 288, 298, 304, 305, 306, 307 Uruguay, 202, 203

Wakefield, 41, 57, 61, 70 Wales, 58 West Country (UK), 40, 42, 43, 50, 61 West Indies, 6, 8, 23, 25, 27, 37, 61, 78, 82, 83, 90, 130, 134, 265 Westphalia, 48 West Riding, 40, 54, 57, 73, 152 Whitby, 41 Whitehaven, 36, 41 Wigan, 90, 317 Wildboarclough (Macclesfield), 63 Wiltshire, 40 Wolverhampton, 61, 73

Valparaiso, 255 Vienna, 139, 140, 154, 248 Virginia, 23, 26, 39, 61

Yarmouth, 40, 41 Yokahama, 255 Yorkshire, 28, 41, 42, 50, 69, 92, n o , 136

Index of subjects

accepting houses, see merchant banks advertising, see branded goods agency houses, 16, 107-28, 161, 220-2, 257-9, 266-72, 281-3, 291, 301-2, 307, American merchants, 11, 27, 69, 87, 91, 96-7, 101, 194, 196, 232, 288-9, 291 American trade, 6-7, 8, 23, 55, 60, 61-4, 72-3, 82f, 149-53, i94ff 'aristocratic bourgeoisie', 9-10, 312 Atlantic economy, 5-7, 41, 69, 8iff, 96-7, 195 Baltic trade, 134, 299 bankruptcy, 47-8, 52, 68, 70, 73, 88, 97-8, 99, 102, 106, in—12, 127, 160, 176, 207, 208, 209-10, 226, 268, 294, 311 banks, see imperial banks, merchant banks, retail (clearing) banks, credit mobilier banks barter trade, 67, 103 bills of exchange, 32, 33, 42, 61-2, 69, 88, 103, 205, 213, 217 Blackwell Hall factors, 168 branded goods, 187-8, 190, 199, 305 brokers, 15, 74-8, 196, 203, 303 calico printers, 28, 31, 38, 48-9, 53, 60, 63, 70, 85, 95, 102-3, I09> IX4> J33> X 37J 145, 148-9, 201 capital: of brokers, 77-8 of commission merchants, 89, 99 of manufacturers, 60, 73—4, 101— 3 of merchants (18th century), 22-4, 26-7, 29, 42 (19th century), 66, 89-91, 92, 96-7, 115, 118, 125-6, 143-8, 157-8, 174-5, J 8o, 182, 194-7, 209-10, 217, 227, 266, 270, 275, 280, 282-3, 290-2, 296, 313-18 Chinese merchants, 227

Chinese trade, 6, 99, 102, n o , 114, 145, 164, 201, 218, 227, 237-9, 264-7, 282-3 clerks, 157, 222 clothiers, 28, 35, 57, 61 clothing, ready-made, 186-8, 194, 199, 293, 296 coal mining and trade, 3, 41, 75, 113, 119, 122-3, I25~7> 222-3, 254-5 coffee trade, 127, 209-10, 254 colonial trade, 6, 8, 23, 31-2, 78, 82, 128, 133, 189-90, 194; see also Indian trade, West Indies trade commercial crises, 28, 93, 101, 116, 163, 165, 290, 312 1825, 87-8, 93, 137, 141, 144, 151-2 1836-7, 71, 93 1847-8, 104, 112-13, 115 1866, 115, 160 1875, 210 1890, 115, 124, 208, 226, 262, 294 commercial travellers, 71, 140-1, 144, 175-8, 184, 187, 189 commissions charged, 64-5, 70-1, 77, 114, 195-6, 203, 222, 265-6, 269, 298-9 continental banks, 208 continental trade, 5-8, 27, 40-2, 55, 63-4, 70, 91, 95, 107, 138, 144, 146, 166, 189-90, 200, 203, 290; see also fairs, international copper, trade in, 3 corn trade, see grain trade 'cosmopolitan bourgeoisie', 12, 165, 278, 312 cotton exchanges, 76-8 cotton growing, 87 cotton industry, 52-3, 58-61, 63, 101-2, 133, H8 cotton mills: in India, 119, 122, 127, 189, 220-2, 254-5, 267, 307 in Russia, 195, 207, 226, 255

336

Index in UK, 59-60, 66, 90, 95, 118, 169, 174, 184, 194, 195 in USA, 97 cotton piece goods, 16, 117, 123, 146, 157, 213, 265, 267, 298 cotton trade, 16, 75, 83-4, 86-8, 95-7, 114, 117, 119, 146-7, 152-6, 168, 171, 174, 195-8, 216, 264-5, 267, 303 credit, merchant, 4, 27, 38, 46, 52, 55-6, 66, 70, 98, 102, 115, 127, 129, 143-4,

I

5IJ

154, 159-60, 163, 175-6, 183, 185, 207, 212, 220, 274, 307 credit mobilier banks, 282, 308 credit rating, 46, 56, 97, 145, 159, 214, 216-17, 280, 293-4 diamond trade, 33, 256, 274-7 dissent (religious), see nonconformity Dutch merchants, 11, 30-1, 34, 45, 135 economies of scale, 101 exploration companies, 306 fairs, international, 31, 60, 63, 133-4, 141-2, 153-4, 169 Far Eastern trade, 6, 8, 33, 55, 81, 90, 95, 102, 107, iogff, 126 — 7, 147, 153, 161, 200-1, 235, 237-41, 263-7, 291, 294-5, 311, 312 flour mills, 208, 211, 303, 306 'free standing' companies, 305-6 freight rates, 6, 153 futures trading, 197-8, 201 'gentlemanly capitalism', 8-9, 289, 293, 308, 312; see also merchants (lifestyle, recruitment) German merchants, 45, 69, 91, 94, 100, 125, 131-49, 195, 206, 216, 232, 266, 269, 272, 273-6, 288-92 gold mines, 119, 123, 217, 256, 275-9 grain trade, 3, 16, 75, 119, 154, 157-60, 202-9, 212, 226-8, 303 Greek merchants, 11, 69, 100, 131, 139, 143, 153-60, 204-6, 208, 224-5, 227> 232, 281, 288-93, 311 Greek Orthodox church, 131, 154 hardware trade, 61, 72-3, 209-10, 265, 274 Hindu merchants, 268 home trade houses, 16, 167-90, 290-3, 316-17 horizontal integration, 181 hosiery industry and trade, 49, 61, 171-2, 178-9, 183, 187, 188, 194, 274

337

Huguenots, 11, 29-31, 34, 45-6, 49, 134, 135, 166 imperial banks, 160, 2i2f, 220, 274-5, 281-2, 307 imperialism, 13-15, 262-83 income tax returns, 2 Indian trade, 7, 8, 10, 33, 55, 63, 77, 82-5, 90, 95, 99, 102, 107-26, 147, 155, 158, 161, 164, 201, 203-5, 208, 235-7, 239-40, 264, 292 indigo, i n , 112, 117, 120, 254-5 industrial investment, 37-8, 58-62, 103, 118-20, 122-4, l/$~9> J77> J 82, 188, 194, 195, 199-201, 216, 235-61, 276-8 Industrial Revolution, 1, 6, 22, 48, 57ff, 181, 3iof inns, 171-3 insurance, 6, 9, 16, 28, 31, 35-6, 64, 171 international banks, 208, 2i2f international houses, 129-66 investment groups, 231-61; see also industrial investment Irish-American merchants, 11, 151-2, 161, 194 iron industry and trade, 29, 74, 121

Jews: German, 11, 33-4, 45-6, 55-6, 100, 131, 137, 288 Sephardic, 11, 29-31, 33-4, 45-6 in general, 139-46, 204, 206-7, 216, 227, 268, 279, 281, 295, 311 joint-stock companies, 117, 121-4, 179, 213, 218-22, 254-6, 273, 300, 305-6 jute mills and trade, 114, 118-19, 122-6, 221-2, 254-5 lace trade and industry, 147, 149, 151, !76-9» :94> 214-15, 293 landowning, 24, 36-7, 131 Latin American trade, 6, 8, 14, 54, 67, 69, 7if, 102, 147, 200, 205-7, 291, 305, 315 Levant trade, 6, 8, 27, 28, 63, 77, 153, 155-9, 2 O 1 Liberal politics, 10, 66, 95, 189, 296 linen trade, 31, 48-9, 61, 70 machinery exports, 269, 294-5 management, 10, 60, 118, 119-20, 127, 221-8, 250-1, 268, 271, 297, 312 manufacturers: become merchants, 58-68, 84, 89-91, 95, 102-3, T52> J 68-9, 291, 304-5 meat trade, 209-10, 292

338

Index

merchant banks, 15, 69-74, 87, 98, 132, 135-6, 143, 146-8, 151, 161, 163, 177, 195, 198, 207, 212-17, 243, 245, 253-4, 276, 280, 282, 287, 297 merchants: apprenticeship, 34 capital, 26-7, 29, 47, 52, 54, 73-4, 115, 124, 143-8, 152, 157-8, 174, 180, 182, 194-7, 209-10, 217, 227, 266, 270, 275, 280, 282-3, 290-2, 296, 313-18 centralisation of control, 12-13, 223-6, 299, 312 commission agents (merchants), 64-70, 77, 89, 92, 97-9, 106-9, : I I > 229 concentration of numbers, 26-7, 93-4, 193-230, 86f culture, n - 1 3 , 46, 165, 289-98, 154, 159-60 deficiencies, 100, 301, 308 dissenters, 12, 43-6, 64, 295-7 dynasties, 65, 82, 94, 96-7, 130, 132, 155, 219, 272 education, 25, 141, 153, 154, 268, 272, 273, 289, 297, 302 elites, 21-9, 267 functions, 3-4, 9-10, 35, 48-50, 57-62, 69-70 incomes, 21-2, 24, 44 investments, 37-9, 58-62, 103, 270-1, 273, 299, 301 lifestyle, 8-9, 44, 46, 115-16, 159-60, 224, 280, 289, 293-6, 312 liquidity, 102-3, IJ6> 280 (as) manufacturers, 37-9, 57-62, 71, 91, 112, 117-20, 123-6, 145, 148-9, 177, 188, 231-56, 267-8, 273, 291, 304-5, 318 mining investment, 123, 273—81 numbers, 21-4, 27, 30, 47, 52, 58, 77, 99, 138, 156-7, 161-3, 202, 204, 270-1, 304 recruitment, 24-5, 28, 42, 93-4, 106, 177, 271-2 social acceptance, 24, 159, 280, 289 middlemen, 75, 163, 195, 229; see also brokers, warehousemen millionaires, 2, 36, 183 multi-national companies, 14-16, 17, 305, 310 nonconformity (religious), 12, 43-6, 64, 295-7 oil trade, 119, 209-10, 292 opium trade, 114, 218 Parsi merchants, 268, 281, 311

pedlars, 95, 96, 169, 195 plantations, 37, i n , 118, 254-5, 271 presbyterians, 43-5 profits, 33, 70, 92, n o , 113, 114, 121, 136, 142, 164, 175, 185, 193, 195, 199, 221, 222, 225, 268, 282-3 Quakers, 43-6, 85, 87-8, 93-5, 295-6 railways: in India, 119, 123, 254-5 in Russia, 226 in UK, 9, 103-4, *74> X79 rate of interest, 24 retail (clearing) banks, 9, 28, 42, 68, 212-82 retailers, see shopkeepers rice trade, 119, 127-8, 303 rubber, 125, 206, 209-10, 255 Russian merchants, 27, 137, 153, 227 Russian trade, 5, 14, 42, 60, 63, 90-1, 155, 195, 202-9, 226-7, 243-6, 291, 315-16 Scottish merchants, 12, 87-8, 95-6, 113, 114, 153 'self-made' men, 24, 28, 66-7, 102, 145, 177, 296-7 shipping, investment in, 35, 52, 85-6, 88, i n , 119, 153, 156, 206, 207, 210-11 shopkeepers, 28, 30, 42, 49, 109, 169-70, 186-7, 190, 274-6, 293 silk trade, 29, 31, 49, 59, 114, 147, 154, 163, 171, 178, 186, 188, 293 slave trade, 82-3 steamships, 86, 113 stocks (commodities), 70, 83, 164, 175, 201 sugar: mills, 254-5, 3°6 plantations, 111-13, 127 trade, 75, 210 companies, 113, 117, 119, 122-3, I25> 213, 222, 255 plantations, 117, 119, 123 trade in, 120, 209 teak trade, 118, 119, 127, 210, 303 technology innovation, 58, 268, 308, 311 telegraph, 118, 163, 193, 201, 225, 227 textile industries, 42, 57-68, 83-4, 86-8, 92; see also calico printing, clothiers, clothing, ready-made, cotton trade, linen trade, silk trade, wool trade timber trade, 16, 119 tobacco trade, 26-7, 38-9, 41, 86

Index trade: British exports and imports, 6 British growth, 5; see also American trade, continental trade, Far East trade, Indian trade etc. British share of world, 5, 264 Treaty Ports (China), 265-6 Unitarians, 46, 140 vertical integration, 116, 181, 188, 194, 199,

211

warehousemen, 28, 30, 69, 168-76; see also home trade houses

339

wars, 28, 51-6, 64, 66 American Civil War, 97, 117 American War of Independence, 5, 27, 32, 48, 51, 60, 82, 98 Crimean, 203 Franco-Prussian, 189-90 French, 48, 51, 54, 69, 73, 75, 82, 131, 133-4, I3^i J54> J 6i, : 66, J 68, 175, 189 201

West Indies trade, 6, 8, 23, 25, 27, 82-3, 90, 265 wool trade, 75, 219-20, 274, 278, 292 woollens and worsteds, trade in 33, 40-1, 43, 55, 59, 61, 67, 142, 146, 152, 168-9, 171, 178